EXHIBIT 10.3
EXECUTION COPY
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AGREEMENT OF PURCHASE AND SALE
BY AND BETWEEN
CMS ENTERPRISES COMPANY,
CMS GENERATION HOLDINGS COMPANY and
CMS INTERNATIONAL VENTURES, LLC,
COLLECTIVELY AS SELLER,
AND
LUCID ENERGY, L.L.C. and
NEW ARGENTINE GENERATION COMPANY, LLC
COLLECTIVELY AS BUYER,
DATED AS OF
MARCH 12, 2007
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS.................................................... 2
Section 1.1 Specific Definitions................................... 2
ARTICLE II SALE AND PURCHASE............................................. 9
Section 2.1 Agreement to Sell and Purchase......................... 9
Section 2.2 Deliveries by the Parties.............................. 10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..................... 12
Section 3.1 Corporate Organization; Qualification.................. 12
Section 3.2 Authority Relative to this Agreement................... 13
Section 3.3 Equity Interests; Assumed Indebtedness................. 13
Section 3.4 Consents and Approvals................................. 15
Section 3.5 No Conflict or Violation............................... 15
Section 3.6 Financial Information.................................. 15
Section 3.7 Contracts.............................................. 16
Section 3.8 Compliance with Law.................................... 16
Section 3.9 Permits................................................ 17
Section 3.10 Litigation............................................. 17
Section 3.11 Employee Matters....................................... 17
Section 3.12 Labor Relations........................................ 18
Section 3.13 Intellectual Property.................................. 18
Section 3.14 Representations with Respect to Environmental
Matters................................................ 19
Section 3.15 Tax Matters............................................ 20
Section 3.16 Insurance.............................................. 22
Section 3.17 Regulatory Matters..................................... 22
Section 3.18 Absence of Certain Changes or Events................... 22
Section 3.19 Absence of Undisclosed Liabilities..................... 24
Section 3.20 Property............................................... 24
Section 3.21 Brokerage and Finders' Fees............................ 24
Section 3.22 Corporate and Accounting Records....................... 24
Section 3.23 Affiliated Transactions................................ 25
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Section 3.24 Certain Practices...................................... 25
Section 3.25 No Other Representations or Warranties................. 26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE BUYER................... 26
Section 4.1 Corporate Organization; Qualification.................. 26
Section 4.2 Authority Relative to this Agreement................... 26
Section 4.3 Consents and Approvals................................. 27
Section 4.4 No Conflict or Violation............................... 27
Section 4.5 Litigation............................................. 28
Section 4.6 Brokerage and Finders' Fees............................ 28
Section 4.7 Investment Representations............................. 28
Section 4.8 Regulation Matters..................................... 28
Section 4.9 No Other Representations or Warranties................. 29
ARTICLE V COVENANTS OF THE PARTIES....................................... 29
Section 5.1 Notification to the CNDC; Negative Antitrust Decision;
Transfer of Equity Interests to a Third Purchaser...... 29
Section 5.2 Further Assurances..................................... 32
Section 5.3 Employee Matters....................................... 32
Section 5.4 Tax Covenants.......................................... 34
Section 5.5 Intercompany Accounts.................................. 38
Section 5.6 Surrender of Intellectual Property..................... 38
Section 5.7 Maintenance of Insurance Policies...................... 39
Section 5.8 Preservation of Records................................ 40
Section 5.9 Public Statements...................................... 40
Section 5.10 Certain Transactions................................... 40
Section 5.11 Use of Corporate Name; Transitional Use of Seller's
Name................................................... 41
Section 5.12 Use of Information Technology.......................... 41
Section 5.13 Confidentiality........................................ 41
Section 5.14 Actions Relating to Entities........................... 42
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ARTICLE VI SURVIVAL; INDEMNIFICATION..................................... 42
Section 6.1 Survival............................................... 42
Section 6.2 Indemnification........................................ 43
Section 6.3 Calculation of Damages................................. 45
Section 6.4 Procedures for Third-Party Claims...................... 45
Section 6.5 Procedures for Inter-Party Claims...................... 46
ARTICLE VII MISCELLANEOUS PROVISIONS..................................... 47
Section 7.1 Interpretation......................................... 47
Section 7.2 Disclosure Letters..................................... 48
Section 7.3 Payments............................................... 48
Section 7.4 Expenses............................................... 48
Section 7.5 Choice of Law.......................................... 48
Section 7.6 Assignment............................................. 48
Section 7.7 Notices................................................ 48
Section 7.8 Resolution of Disputes................................. 50
Section 7.9 Language............................................... 52
Section 7.10 No Right of Setoff..................................... 52
Section 7.11 Time is of the Essence................................. 52
Section 7.12 Specific Performance................................... 52
Section 7.13 Currency Matters....................................... 52
Section 7.14 Entire Agreement....................................... 52
Section 7.15 Binding Nature; Third Party Beneficiaries.............. 53
Section 7.16 Counterparts........................................... 53
Section 7.17 Severability........................................... 53
Section 7.18 Headings............................................... 53
Section 7.19 Waiver................................................. 53
Section 7.20 Amendment.............................................. 54
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EXHIBITS
A ASSIGNMENT OF QUOTAS AGREEMENT
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INDEX OF DEFINED TERMS
Action................................................................... 2
Affected Employees....................................................... 2
Affiliate................................................................ 2
Agreement................................................................ 2
Antitrust Approval....................................................... 2
Antitrust Law............................................................ 2
Applicable Law........................................................... 2
AR$...................................................................... 2
Business Day............................................................. 3
Buyer Disclosure Letter.................................................. 3
Claims................................................................... 3
CNDC..................................................................... 3
Code..................................................................... 3
Confidentiality Agreement................................................ 3
CTM...................................................................... 3
Cut-off.................................................................. 3
Damages.................................................................. 3
Direct Equity Interests.................................................. 3
Distribution............................................................. 3
Dollars or $............................................................. 3
Employees................................................................ 4
Entities................................................................. 4
Environmental Laws....................................................... 4
Environmental Permit..................................................... 4
EWG...................................................................... 4
Exchange Act............................................................. 4
FERC..................................................................... 4
FPA...................................................................... 4
FUCO..................................................................... 4
GAAP..................................................................... 5
Generation............................................................... 5
Governmental Authority................................................... 5
Hazardous Substances..................................................... 5
Hidroinvest SPA.......................................................... 5
Indebtedness............................................................. 5
Indirect Equity Interests................................................ 5
Intellectual Property.................................................... 5
Knowledge of Buyer....................................................... 6
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Knowledge of Seller...................................................... 6
Liabilities.............................................................. 6
Liens.................................................................... 6
Material Adverse Effect.................................................. 6
Negative Antitrust Decision.............................................. 7
Operating................................................................ 7
Ownership Percentage..................................................... 7
Pension Plans............................................................ 7
PermittedLiens........................................................... 7
Person................................................................... 8
Representatives.......................................................... 8
Seller Disclosure Letter................................................. 8
Subsidiary............................................................... 8
Tax Return............................................................... 9
Taxes.................................................................... 9
TGM...................................................................... 9
USFCPA................................................................... 9
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ANNEXES
I EQUITY INTERESTS
II ASSUMED INDEBTEDNESS
III COPY OF THE HIDROINVEST SPA
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AGREEMENT OF PURCHASE AND SALE
This AGREEMENT OF PURCHASE AND SALE, dated as of March 12, 2007, is made
and entered into by and between CMS Enterprises Company and CMS Generation
Holdings Company, each a Michigan corporation, and CMS International Ventures,
L.L.C., a Michigan limited liability company (collectively, the "Seller"), and
Lucid Energy, LLC ("Lucid") and New Argentine Generation Company, LLC, a
Delaware limited liability company ("Newco" and collectively with Lucid, the
"Buyer").
WITNESSETH:
WHEREAS, Seller and Lucid have entered into that certain Common Agreement
dated as of the date hereof (the "Common Agreement"), pursuant to which Seller,
directly or through Affiliates of Seller, agreed to sell, and Lucid, directly or
through Affiliates of Lucid, agreed to acquire, upon the terms and conditions
set forth in this Agreement certain Argentina-based natural gas transmission and
marketing and independent power production businesses (the "Argentine
Businesses"), and upon the terms and conditions entered into contemporaneously
herewith, Michigan-based natural gas transmission, gathering, storage and
processing businesses (the "Michigan Businesses");
WHEREAS, Seller and Buyer intend that the transactions contemplated by the
agreements relating to the sale of the Michigan Business will be consummated if
and only if the sale of the Argentine Businesses is consummated;
WHEREAS, the Argentine Businesses are conducted through various Argentine
legal entities, the equity participations in which are owned, directly or
indirectly and in relevant amounts, by Seller ("Equity Interests" as described
on Annex I);
WHEREAS, Buyer desires to purchase, and Seller desires to sell to Buyer,
the Equity Interests, and Seller desires to assign, and Buyer desires to assume,
certain intercompany Indebtedness as described in Annex II (the "Assumed
Indebtedness"), in each case upon the terms and subject to the conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing, the representations,
warranties, covenants and agreements set forth in this Agreement, and other good
and valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Specific Definitions.
For purposes of this Agreement, the following terms shall have the meanings set
forth below:
"Action" shall mean any administrative, regulatory, judicial
or other formal proceeding, action, Claim, suit,
investigation or inquiry by or before any
Governmental Authority, arbitrator or mediator, at
law or at equity.
"Affected Employees" shall mean the Employees on the date hereof.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of
the General Rules and Regulations under the Exchange
Act.
"Agreement" shall mean this Agreement of Purchase and Sale,
together with the Seller Disclosure Letter, Buyer
Disclosure Letter, Annexes I, II and III and
Exhibits hereto, as the same may be amended or
supplemented from time to time in accordance with
the provisions hereof.
"Antitrust Approval" is the approval of the Acquisition without
undertakings by the Republic of Argentina
Secretariat of Internal Trade, or any agency or
tribunal that may replace it in the future or that
may be declared by a res judicata judgment to be
empowered to issue a final decision on the
Acquisition, approving the same under the Antitrust
Law.
"Antitrust Law" as regards the Republic of Argentina means Law No.
25,156 (as amended), Decree No. 89/2001, Resolution
No. 40/2001 of the former Secretariat of Competition
and Consumer Defense, Resolution No. 164/2001 of the
former Secretariat of Competition, Deregulation and
Consumer Defense, Resolution No. 26/2006 of the
former Secretariat of Technical Coordination and any
other law or regulation, administrative resolution
and judicial decision addressing competition issues,
including but not limited to the competition
clearance of mergers, acquisitions or other business
combinations.
"Applicable Law" shall mean any statute, treaty, code, law,
ordinance, executive order, rule or regulation
(including a regulation that has been formally
promulgated in a rule-making proceeding but, pending
final adoption, is in proposed or temporary form
having the force of law); guideline or notice having
the force of law; or approval, permit, license,
franchise, judgment, order, decree, injunction or
writ of any Governmental Authority applicable to a
specified Person or specified property, as in effect
from time to time.
"AR$" shall mean Argentine Pesos.
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"Business Day" shall mean any day that is not a Saturday, Sunday or
other day on which banks are required or authorized
by law to be closed in the City of New York.
"Buyer Disclosure Letter" shall mean the Buyer Disclosure Letter delivered to
Seller concurrently with this Agreement, which is an
integral part of this Agreement.
"Claims" shall mean any and all claims, lawsuits, demands,
causes of action, investigations and other
proceedings (whether or not before a Governmental
Authority).
CNDC" shall mean Comision Nacional de Defensa de la
Competencia.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Confidentiality shall mean the confidentiality agreement entered
Agreement" into by and between the EE Group and CMS Enterprises
Company dated October 23, 2006.
"CTM" shall mean Centrales Termicas Mendoza S.A.
"Cut-off" shall mean December 31, 2006.
"Damages" shall mean judgments, settlements, fines, penalties,
damages, Liabilities, losses or deficiencies, costs
and expenses, including reasonable attorney's fees,
court costs, expenses of arbitration or mediation,
and other out-of-pocket expenses incurred in
investigating or preparing the foregoing; provided,
however, that "Damages" shall not include
incidental, indirect or consequential damages,
damages for lost profits or other special, punitive
or exemplary damages unless such Damages are deemed
to be direct damages of an Indemnified Party in
connection with a Third-Party Claim.
"Direct Equity Interests" shall mean the equity interests held directly by the
Seller as described in Annex I.
"Distribution" shall mean: (a) any dividend, distribution,
repayment or repurchase of share capital, capital
contribution or other return of capital to such
Person's shareholders or equivalent holders of its
ownership interests; (b) any repayment of any loan
owed to an Affiliate of such Person; and (c) any
loan made to an Affiliate of such Person, in each
case, other than to any of the Entities.
"Dollars or $" shall mean dollars of the United States of America.
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"Employees" shall mean all employees employed by the Argentine
Businesses, including employees on short-term
disability, military leave, maternity leave or
paternity leave and other approved leaves of absence
from active employment as set forth in Section
1.1(a) of the Seller Disclosure Schedule.
"Entities" shall mean each of the following Argentine
sociedades anonimas and sociedades de
responsabilidad limitada, as the case may be: CMS
Operating S.R.L., CMS Centrales Termicas S.A., CMS
Generation S.R.L., CMS Comercializadora de Energia
S.A., Cuyana S.A. de Inversiones, Central Termicas
Mendoza S.A., CMS Ensenada S.A. and Transportadora
de Gas del Mercosur S.A.
"Environmental Laws" shall mean all foreign, federal, state and local
laws, regulations, rules and ordinances in effect
and existence as of the closing Date where the
Argentine Businesses currently operate relating to
pollution or protection of human health or the
environment, natural resources or safety and health,
including laws relating to releases or threatened
releases of Hazardous Substances into the
environment (including ambient air, surface water,
groundwater, land, surface and subsurface strata).
"Environmental Permit" shall mean any Permit, formal exemption,
identification number or other authorization issued
by a Governmental Authority pursuant to an
applicable Environmental Law.
"EWG" shall have the meaning set forth for the term
"exempt wholesale generator" at Section 366.1 of
FERC's regulations (18 C.F.R. 366.1).
"Exchange Act" shall mean the United States Securities Exchange Act
of 1934, as amended.
"FERC" shall mean the United States Federal Energy
Regulation Commission.
"FPA" shall mean the United States Federal Power Act, as
amended.
"FUCO" shall have the meaning set forth for the term
"foreign utility company" at Section 366.1 of FERC's
regulations (18 C.F.R. 366.1).
"GAAP" shall mean Argentine generally accepted accounting
principles
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as in effect from time to time, applied on a
consistent basis.
"Generation" shall mean CMS Generation S.R.L.
"Governmental Authority" shall mean any executive, legislative, judicial,
tribal, regulatory, taxing or administrative agency,
body, commission, department, board, court,
tribunal, arbitrating body or authority of the
United States or any foreign country, or any state,
local or other governmental subdivision thereof.
"Hazardous Substances" shall mean any chemicals, materials or substances
defined as or included in the definition of
"hazardous substances", "hazardous wastes",
"hazardous materials", "hazardous constituents",
"restricted hazardous materials", "extremely
hazardous substances", "toxic substances",
"contaminants", "pollutants", "toxic pollutants", or
words of similar meaning and regulatory effect under
any applicable Environmental Law.
"Hidroinvest SPA" shall mean that certain Stock Purchase Agreement
between CMS Generation Co. and Generation, as
sellers, and Empresa Nacional de Electricidad S.A. -
ENDESA CHILE, as buyer, dated March 8, 2007, the
copy of which is attached as Annex III to this
Agreement.
"Indebtedness" of any Person shall mean (a) all liabilities and
obligations of such Person for borrowed money or
evidenced by notes, bonds or similar instruments,
(b) obligations in respect of the deferred purchase
price of property or services (other than any amount
that would constitute current assets) to the extent
that such amount would be accrued as a liability on
a balance sheet prepared in accordance with GAAP,
(c) obligations in respect of capitalized leases,
(d) obligations in respect of letters of credit,
acceptances or similar obligations, (e) obligations
under interest rate cap agreements, interest rate
swap agreements, foreign currency exchange contracts
or other hedging contracts, (f) any accrued or
unpaid interest or breakage fees related to any of
the foregoing and (g) any guarantee of the
obligations of another Person with respect to any of
the foregoing.
"Indirect Equity shall mean the equity interests held indirectly by
Interests" the Seller as described in Annex I.
"Intellectual Property" shall mean all Argentine and foreign (a) patents and
patent applications, (b) trademarks, service marks,
logos, slogans, and
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trade dress, (c) copyrights, (d) software (excluding
commercial off-the-shelf software), and (e) all
confidential and proprietary information and
know-how.
"Knowledge of Buyer" shall mean, with respect to Lucid, the knowledge,
after due inquiry, of those Persons set forth in
Section 1.1(b) of the Buyer Disclosure Letter, and
with respect to Newco, the knowledge, after due
inquiry, of those Persons set forth in Section
1.1(c) of the Buyer Disclosure Letter.
"Knowledge of Seller" shall mean the knowledge, after due inquiry, of
those Persons set forth in Section 1.1(b) of the
Seller Disclosure Letter.
"Liabilities" shall mean any and all debts, liabilities,
commitments and obligations, whether or not fixed,
contingent or absolute, matured or unmatured,
liquidated or unliquidated, accrued or unaccrued,
known or unknown, whether or not required by GAAP to
be reflected in financial statements or disclosed in
the notes thereto.
"Liens" shall mean any mortgage, pledge, lien (statutory or
otherwise and including, without limitation,
environmental, ERISA and tax liens), security
interest, easement, right of way, limitation,
encroachment, covenant, claim, restriction, right,
option, conditional sale or other title retention
agreement, charge or encumbrance of any kind or
nature (except for any restrictions arising under
any applicable securities laws).
"Material Adverse Effect" shall mean actions, circumstances or omissions that
have an effect, individually or in the aggregate,
that is materially adverse to (a) the business,
operations, financial condition or assets of the
Entities, taken as a whole or (b) the ability of
Seller to consummate the transactions contemplated
hereby, in each case, other than any effect
resulting from, relating to or arising out of: (i)
the negotiation, execution, announcement of this
Agreement and the transactions contemplated hereby,
including the impact thereof on relationships,
contractual or otherwise, with customers, suppliers,
distributors, partners, joint owners or venturers
and employees, (ii) any action taken by Seller, the
Entities, Buyer or any of their respective
representatives or Affiliates required or permitted
to be taken by the terms of this Agreement or
necessary to consummate the transactions
contemplated by this Agreement, (iii) the general
state of the industries in Argentina in which the
Entities operate (including (A) pricing levels, (B)
changes in the national, regional or local wholesale
or retail markets for
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natural gas or electricity in Argentina, (C) changes
in the national, regional or local natural gas
pipeline systems in Argentina, (D) changes in the
Argentine national, regional or local markets for
the distribution of electricity, (E) rules,
regulations or decisions of Governmental Authorities
or the courts affecting the natural gas transmission
or independent power production industries in
Argentina as a whole and (F) any condition described
in the Seller Disclosure Letter, (iv) general legal,
regulatory, political, business, economic, capital
market and financial market conditions (including
prevailing interest rate levels), or conditions
otherwise generally affecting the industries in
which the Entities operate, (v) any change in law,
rule or regulation or GAAP or interpretations
thereof applicable to the Entities, Seller or Buyer,
(vi) acts of God, national or international
political or social conditions or (vii) general
economic conditions in Argentina; provided, that,
for purposes of determining a "Material Adverse
Effect", any effect on the business, financial
conditions or assets of the business of any Person
shall include only the portion of such effect
attributable to the ownership interests of the
Entities and their Affiliates and shall exclude any
portion of such effect attributable to the ownership
interest of any third party in such Person.
"Negative Antitrust shall mean a resolution by the Republic of Argentina
Decision" Secretariat of Internal Trade, or any agency or
tribunal that may replace it in the future or that
may be declared by a res judicata judgment to be
empowered to issue a final decision on the
Acquisition, either prohibiting the Acquisition or
conditioning it to the fulfilment of any unduly
burdensome undertakings, in each case, exclusively
based on the Antitrust Law.
"Operating" shall mean CMS Operating S.R.L.
"Ownership Percentage" shall mean, with respect to any Subsidiary, the
percentage of the equity represented by securities
or ownership interests, or, in the case of a
partnership, the percentage of the profits and
losses of such partnership, owned directly or
indirectly by Seller as of the date hereof.
"Pension Plans" shall mean all Plans providing pensions,
superannuation benefits or retirement savings,
including pension plans, top up pensions or
supplemental pensions.
"Permitted Liens" shall mean (a) zoning, planning and building codes
and other
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applicable laws regulating the use, development and
occupancy of real property and permits, consents and
rules under such laws; (b) encumbrances, easements,
rights-of-way, covenants, conditions, restrictions
and other matters affecting title to real property
which do not materially detract from the value of
such real property or materially restrict the use of
such real property; (c) leases and subleases of real
property; (d) all easements, encumbrances or other
matters which are necessary for utilities and other
similar services on real property; (e) Liens to
secure Indebtedness reflected on the Financial
Statements or Indebtedness incurred in the ordinary
course of business, consistent with past practice,
after the date thereof, (f) Liens for Taxes and
other governmental levies not yet due and payable
or, if due, (i) not delinquent or (ii) being
contested in good faith by appropriate proceedings
during which collection or enforcement against the
property is stayed and with respect to which
adequate reserves have been established and are
being maintained to the extent required by GAAP, (g)
mechanics', workmen's, repairmen's, materialmen's,
warehousemen's, carriers' or other Liens, including
all statutory Liens, arising or incurred in the
ordinary course of business, (h) original purchase
price conditional sales contracts and equipment
leases with third parties entered into in the
ordinary course of business, (i) Liens that do not
materially interfere with or materially affect the
value or use of the respective underlying asset to
which such Liens relate, and (j) Liens which are
reflected in any Material Contract.
"Person" shall mean any natural person, corporation, company,
general partnership, limited partnership, limited
liability partnership, joint venture,
proprietorship, limited liability company, or other
entity or business organization or vehicle, trust,
unincorporated organization or Governmental
Authority or any department or agency thereof.
"Representatives" shall mean accountants, counsel or representatives.
"Seller Disclosure shall mean the Seller Disclosure Letter delivered to
Letter" Buyer concurrently with this Agreement, which is an
integral part of this Agreement.
"Subsidiary" of any entity means, at any date, any Person (a) the
accounts of which would be consolidated with and
into those of the applicable Person in such Person's
consolidated financial statements if such financial
statements were prepared in accordance with GAAP as
of such date or (b) of which
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securities or other ownership interests representing
more than fifty percent (50%) of the equity or more
than fifty percent (50%) of the ordinary voting
power or, in the case of a partnership, more than
fifty percent (50%) of the general partnership
interests or more than fifty percent (50%) of the
profits or losses of which are, as of such date,
owned, controlled or held, directly or indirectly by
the applicable Person or one or more subsidiaries of
such Person.
"Tax Return" shall mean any report, return, declaration, or other
information required to be supplied to a
Governmental Authority in connection with Taxes
including any claim for refund or amended return.
"Taxes" shall mean all taxes, levies or other like
assessments, including income, gross receipts,
excise, value added, real or personal property,
withholding, asset, sales, use, license, payroll,
social security (including payments and
contributions to pension funds) transaction,
capital, business, corporation, employment, net
worth and franchise taxes, or other governmental
taxes of any kind whatsoever imposed by or payable
to any U.S. or foreign, federal, state, provincial
or local taxing authority, whether computed on a
separate, consolidated, unitary, combined or any
other basis; and whether imposed as transferee,
successor, by contract or otherwise; in each
instance such term shall include any interest,
penalties or additions to tax attributable to any
such Tax.
"TGM" shall mean Transportadora de Gas del Mercosur S.A.
"US FCPA" shall mean the United States Foreign Corrupt
Practices Act of 1977, as amended.
ARTICLE II
SALE AND PURCHASE
Section 2.1 Agreement to Sell and Purchase.
(a) In accordance with the terms of this Agreement and
simultaneously with the payment of the Purchase Price in accordance with
Section 2.1(b) of this Agreement, (i) Buyer shall purchase, acquire and
accept from Seller, and Seller shall sell, convey, assign, transfer and
deliver to Buyer, the Equity Interests, free and clear of all Liens, and
(ii) Buyer shall purchase and assume from Seller, and Seller shall sell and
assign to Buyer, the Assumed Indebtedness, free and clear of all Liens (the
"Acquisition").
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(b) As of the date hereof, Buyer shall pay to Seller, in
consideration for (i) the purchase of the Equity Interests pursuant to
Section 2.1(a)(i) and (ii) the assignment and assumption of the Assumed
Indebtedness pursuant to section 2.1(a)(ii), an amount in cash equal to
$125,000,000 less the amount paid to CMS Generation Co. under the
Hidroinvest SPA (the "Purchase Price"), by wire transfer of same day funds
to an account or accounts and in such amounts as designated by Seller.
Section 2.2 Deliveries by the Parties.
(a) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall deliver or cause to be
delivered, in form and substance satisfactory to Buyer (unless previously
delivered), the following items:
(i) the appropriate notices of transfer of the Direct Equity
Interests signed by the holders of record and addressed to each of the
relevant Entities whose Equity Interests are being transferred;
(ii) certified copies of all resolutions of the boards of
directors of Seller approving the entering into and completion of the
transactions contemplated by this Agreement;
(iii) certified copies of the registration of Seller at the
Superintendency of Corporations (Inspeccion General de Justicia), in
accordance with Section 123 of Argentine Corporate Act No 19.550;
(iv) except for TGM, (x) all organizational documents
(estatutos); (y) all books of minutes of meeting and resolutions of
shareholders, quotaholders, directors and managers (and any committees);
and (z) the share certificate books (libro de registro de accionistas), if
applicable;
(v) except for the resignations of those officers listed in
Section 2.2(a)(v) of the Seller Disclosure Letter, written resignations,
effective as of the date hereof, from each of the regular and alternate
directors, and of the regular and alternate managers, as the case may be,
and, when applicable, and statutory supervisors (sindicos) of any of the
Entities appointed by Seller;
(vi) written evidence of the signing by the directors and
statutory auditors (sindicos) appointed by Seller of the minutes which are
pending in the shareholders' and board of directors' minutes books of the
Entities;
(vii) official reports stating that CMS International Ventures
LLC and CMS Generation Holdings Company are not subject to any restriction
to sell and transfer their interests in Operating and Generation, in
compliance with Section 127 of General Resolution 7/2005 passed by the
Superintendency of Corporations (Inspeccion General de Justicia). The
above-mentioned reports shall be granted by the competent authority with
jurisdiction in the City of Buenos Aires and should be dated up to ten (10)
days prior to the date hereof;
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(viii) officer's certificates of CMS International Ventures, LLC
and CMS Generation Holdings Company stating that, according to the laws of
the State of Michigan, United States of America, it is not possible to
comply with Section 127, 4th paragraph of General Resolution 7/2005 passed
by the Superintendency of Corporations (Inspeccion General de Justicia)
based on the fact that there is no governmental authority that can issue
such certificate;
(ix) duly executed instruments of transfer, assignment and
assumption of the Assumed Indebtedness, and all underlying documentation
evidencing the rights and obligations of the creditors and obligors
thereunder (the "Assumed Indebtedness Documents"), in form and substance
acceptable to Buyer; and
(x) a certificate of incumbency and authority of Seller dated the
date hereof.
(b) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller and Buyer shall enter into the
relevant Assignment of Quotas Agreements substantially in the form of the
Agreement attached hereto as Exhibit B to perfect the transfer of Seller's
quotas in Operating and in Generation to Buyer.
(c) As of the date hereof, Buyer shall deliver or cause to be
delivered to Seller (unless previously delivered), the following items:
(i) the Purchase Price by wire transfer of same day funds to an
account or accounts and in such amounts as designated by Seller in writing;
and
(ii) a certificate of incumbency and authority of Buyer dated the
date hereof.
(d) As of the date hereof, Seller shall cause the board of
directors or managers of the Entities, as the case may be, to call
shareholders' or quotaholders' meetings (as applicable) of the Entities
wholly owned, directly or indirectly, by Seller to be held on the date
hereof and shall cause such shareholders or quotaholders meetings to (i)
accept the resignation of the regular and alternate directors and of the
regular and alternate managers, as the case may be, and, when applicable,
statutory supervisors (sindicos) originally nominated by Seller or its
Affiliates and, if applicable, replace the officers appointed by Seller who
have not resigned to their offices as of the date hereof; (ii) approve the
performance of the resigning directors and managers, as the case may be,
and statutory supervisors (sindicos); (iii) appoint regular and alternate
directors and regular and alternate managers, as the case may be, and, when
applicable, statutory supervisors (sindicos) designated by Buyer; (iv)
change, pursuant to Buyer's instructions, the Entities' legal address (sede
social) and corporate name (denominacion social) in order to eliminate
references to "CMS"; (v) amend the requisite organizational documents to
authorize each of the Entities to guarantee the debt (actual or contingent)
of any Person (including any Person directly or indirectly
11
controlling, controlled by, under common control with or otherwise
affiliated to, such Entities) and to pledge, mortgage or otherwise encumber
(including, without limitation, by way of trust assignment or security
assignment) any of its present or future assets of any kind as security for
the debt (actual or contingent) of any Person (including any person
directly or indirectly controlling, controlled by, under common control
with or otherwise affiliated to, such Entities); and (vi) amend the by-laws
of each of Operating and Generation in order to eliminate the reference to
the identity of each quotaholders from the articles of the by-laws.
(e) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall cause the board of directors
of CTM to convey (i) a special class "A" shareholders' meeting to be held
on the date hereof to (A) accept the resignation of the regular and
alternate directors and statutory supervisors (sindicos) nominated by class
"A" shareholders; and (B) appoint regular and alternate directors and
statutory supervisors (sindicos) designated by class "A" shareholders; (ii)
a special class "B" shareholders' meeting to be promptly held after the
date hereof to (A) accept the resignation of the regular and alternate
directors and statutory supervisors (sindicos) nominated by class "B"
shareholders and (B) appoint regular and alternate directors and statutory
supervisors (sindicos) designated by class "B" shareholders; and (iii) an
ordinary shareholders meeting to be promptly held after the date hereof in
order to consider and approve the performance of the resigning officers.
Buyer undertakes to approve the performance of the regular and alternate
directors and statutory supervisors (sindicos) appointed by class "A" and
class "B" shareholders in the relevant general shareholders' meeting of
CTM.
(f) Simultaneously with the confirmation of receipt of the
Purchase Price by Seller's bank, Seller shall cause the members of the
board of directors of TGM appointed by Class "C" shareholders to request a
calling of a board of directors' meeting in order to convey (i) a special
Class "C" shareholders' meeting to be promptly held after the date hereof
to (A) accept the resignation of the regular and alternate directors
nominated by Class "C" shareholders and (B) appoint regular and alternate
directors designated by Class "C" shareholders; and (ii) an ordinary
shareholders' meeting to be promptly held after the date hereof in order to
consider and approve the performance of the resigning officers. Buyer
undertakes to approve the performance of the regular and alternate
directors appointed by Seller in the relevant general shareholders' meeting
of TGM.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows:
Section 3.1 Corporate Organization; Qualification. Each Seller is duly
organized and validly existing and in good standing under the Laws of its
governing jurisdiction. Each of the Entities is duly organized and validly
existing and in good standing under the Laws of its governing jurisdiction
and each (a) has the requisite power
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to carry on its businesses as currently conducted and (b) is duly qualified
to do business in each of the jurisdictions in which the ownership,
operation or leasing of its properties or assets or the conduct of its
business requires it to be so qualified, except where the failure to be so
qualified would not have a Material Adverse Effect.
Section 3.2 Authority Relative to this Agreement.
Each Seller has full corporate power and authority to execute and
deliver this Agreement and the other agreements, documents and instruments
to be executed and delivered by it in connection with this Agreement and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance of this Agreement and the other agreements,
documents and instruments to be executed and delivered in connection with
this Agreement and the consummation of the transactions contemplated hereby
and thereby have been duly and validly authorized by all the necessary
action on the part of each Seller (as applicable), and no other corporate
or other proceedings on the part of Seller are necessary to authorize this
Agreement and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement or to consummate
the transactions contemplated hereby and thereby. This Agreement and the
other agreements, documents and instruments to be executed and delivered in
connection with this Agreement have been duly and validly executed and
delivered by Seller and assuming that this Agreement and the other
agreements, documents and instruments to be executed and delivered in
connection with this Agreement constitute legal, valid and binding
agreements of the Buyer are enforceable against Seller in accordance with
their respective terms, except that such enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally or
general principles of equity.
Section 3.3 Equity Interests; Assumed Indebtedness.
(a) Except as set forth in Section 3.3(a) of the Seller
Disclosure Letter, the Equity Interests are duly authorized, validly issued
and fully paid and were not issued in violation of any preemptive rights.
Except as set forth in Section 3.3(a) of the Seller Disclosure Letter, (i)
there are no equity interests of the Entities authorized, issued or
outstanding or reserved for any purpose and (ii) there are no (A) existing
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the
Entities, obligating Seller or any of its Affiliates to issue, transfer or
sell, or cause to be issued, transferred or sold, any additional equity
interest in the Entities, (B) outstanding securities of Seller or its
Affiliates that are convertible into or exchangeable or exercisable for any
equity interest in the Entities, (C) options, warrants or other rights to
purchase from Seller or its Affiliates any such convertible or exchangeable
securities or (D) outstanding Liabilities to pay any additional amounts on
the equity interests or in respect of the capital of the Entities,
including any Liabilities in respect of obligations to make capital
contributions to any of the Entities, or (E) other than this Agreement,
contracts, agreements or arrangements of any kind relating to the issuance
of any equity
13
interest in the Entities, or any such options, warrants or rights, pursuant
to which, in any of the foregoing cases, Seller or its Affiliates are
subject or bound.
(b) Except as set forth in Section 3.3(b) of the Seller
Disclosure Letter, Seller owns all of the issued and outstanding Equity
Interests and has good, valid and marketable title to the Equity Interests,
free and clear of all Liens or other defects in title, and the Equity
Interests have not been pledged or assigned to any Person. The Equity
Interests owned by Seller are not subject to any restrictions on
transferability other than those imposed by this Agreement and by
applicable securities laws. Following the transfer of the Equity Interests
to Buyer, Buyer will own all of the issued and outstanding Equity Interests
and will have good and valid title to the Equity Interests, free and clear
of all Liens.
(c) Section 3.3(c) of the Seller Disclosure Letter sets forth, as
of the date hereof, a list of each of the Entities, including its name, its
jurisdiction of organization, its authorized and outstanding capital stock
(or equivalent equity interest) and the percentage of its outstanding
capital stock (or quota) owned by the Seller and/or the Entities, as
applicable. Except as set forth in Section 3.3(c) of the Seller Disclosure
Letter, the shares of outstanding capital stock or other equity interests
or quotas, as the case may be, of the Entities are duly authorized, validly
issued, fully paid and nonassessable, and are held of record by Seller and
the Entities as set forth in Section 3.3(c) of the Seller Disclosure
Letter, free and clear of Liens. Except as set forth in Section 3.3(c) of
the Seller Disclosure Letter, there are no (i) existing options, warrants,
calls, preemptive rights, subscriptions or other rights, agreements,
arrangements or commitments of any character, relating to the capital stock
or partnership interest of the Entities, obligating Seller, the Entities,
or any of their Affiliates to issue, transfer or sell, or cause to be
issued, transferred or sold, any equity interest in any of the Entities,
(ii) outstanding securities of Seller, the Entities, or their Affiliates
that are convertible into or exchangeable or exercisable for any of capital
stock or partnership interest of any of the Entities, (iii) options,
warrants or other rights to purchase from Seller, the Entities, or their
Affiliates any such convertible or exchangeable securities or (iv) other
than this Agreement, contracts, agreements or arrangements of any kind
relating to the issuance of any equity interest of any of the Entities, or
any such options, warrants or rights, pursuant to which, in any of the
foregoing cases, Seller, any of the Entities or its Affiliates are subject
or bound.
(d) Except as set forth in Section 3.3(d) of the Seller
Disclosure Letter, there are no Persons (other than an Entity) in which any
of the Entities owns any equity or other similar interest.
(e) Seller represents and warrants that it is the legal and
beneficial owners of the Assumed Indebtedness, free and clear of any Lien.
Seller has delivered to Buyer true and complete copies of all Assumed
Indebtedness Documents. Seller further represents and warrants that any and
all representations and warranties given by Seller or any of its Affiliates
in the Assumed Indebtedness Documents are true and correct in all material
respects.
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Section 3.4 Consents and Approvals.
Except as otherwise provided in Section 5.1(a) of this Agreement or
as set forth in Section 3.4 of the Seller Disclosure Letter, Seller
requires no consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority, or any other Person as a
condition to the execution and delivery of this Agreement or the
performance of the obligations hereunder, except where the failure to
obtain such consent, approval or authorization of, or filing of,
registration or qualification with, any Governmental Authority, or any
other Person would not have a Material Adverse Effect.
Section 3.5 No Conflict or Violation.
Except as set forth in Section 3.5 of the Seller Disclosure Letter,
the execution, delivery and performance by the Seller of this Agreement
does not:
(a) violate or conflict with any provision of the organizational
documents or bylaws of Seller or any of the Entities;
(b) violate any applicable provision of a law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any
Governmental Authority, except where such violation would not have a
Material Adverse Effect; or
(c) violate, result in a breach of, constitute (with due notice
or lapse of time or both) a default or cause any obligation, penalty or
premium to arise or accrue under any Material Contract, lease, loan,
mortgage, security agreement, trust indenture or other material agreement
or instrument to which Seller or any of the Entities is a party or by which
any of them is bound or to which any of their respective properties or
assets is subject, except for violations, breaches or defaults that would
not have a Material Adverse Effect.
(d) result in the imposition or creation of any material Lien
upon or with respect to any of the properties or assets owned or used by
the Entities; or
(e) result in the cancellation, modification, revocation or
suspension of any material Permits or in the failure to renew any material
Permit.
Section 3.6 Financial Information.
(a) Prior to the date hereof, Seller has made available to Buyer
or its representatives the audited combined balance sheet of each of the
Entities as of December 31, 2005, and the audited combined statements of
income and cash flows of each of the Entities for each of the two years
ended December 31, 2004 and 2005, together with the related notes thereto,
accompanied by the reports thereon of Seller's accountants, as well as such
audited combined balance sheet and statements of income and cash flows of
each of the Entities (except Generation and TGM) as of and for the two
years ended December 31, 2005 and 2006, (collectively, the "Financial
Statements").
15
(b) The Financial Statements were prepared in accordance with
GAAP, consistently applied throughout the periods indicated and fairly
present, in all material respects, the combined financial position, results
of operations and cash flows of each of the Entities, as of the dates
thereof and for the periods covered thereby, in each case, except as
disclosed in the Financial Statements (or the notes thereto) or in Section
3.6(b) of the Seller Disclosure Letter.
(c) As reflected in the Financial Statements as of December 31,
2006, there was approximately $50,000,000 of unencumbered cash and cash
equivalents held by the Entities (excluding TGM and Generation).
(d) As the date hereof, $26,900,000 collected by Generation under
the Hidroinvest SPA as purchase price of the Hidroinvest S.A. shares sold
by Generation thereunder are held in the an account of Operating for the
benefit of Generation.
Section 3.7 Contracts.
(a) Section 3.7(a) of the Seller Disclosure Letter sets forth a
list of each material contract, lease or similar agreement or instrument to
which any of the Entities (except for TGM) is a party, other than (i) any
purchase or sale orders arising in the ordinary course of business, and
(ii) any contract involving the payment or receipt of less than $350,000 in
any one year (each contract set forth in Section 3.7(a) of the Seller
Disclosure Letter being referred to herein as a "Material Contract").
(b) Section 3.7(b) of the Seller Disclosure Letter sets forth a
list of each contract that any of the Entities has with Seller or with any
Affiliate of Seller that is not one of the Entities.
(c) Except as set forth in Section 3.7(c) of the Seller
Disclosure Letter, each Material Contract is a valid and binding agreement
of the Entities party thereto and, to the Knowledge of Seller, is in full
force and effect.
(d) Except as set forth in Section 3.7(d) of the Seller
Disclosure Letter, there is no default by Seller or any Entity under any
Material Contract to which it is a party, and Seller has no Knowledge of
any default by any counterparties under any Material Contract, other than
defaults which have been cured or waived and which would not have a
Material Adverse Effect.
Section 3.8 Compliance with Law.
Except for Environmental Laws and Tax laws, which are the subject of
Section 3.14 and Section 3.15, respectively, and except as set forth in
Section 3.8 of the Seller Disclosure Letter, the Entities are in compliance
with all federal, state, local or foreign laws, statutes, ordinances,
rules, regulations, judgments, orders, writs, injunctions or decrees of any
Governmental Authority applicable to their respective properties, assets
and businesses except where such noncompliance would not have a Material
Adverse Effect.
16
Section 3.9 Permits.
Except as set forth in Section 3.9 of the Seller Disclosure Letter,
Seller and the Entities have all permits, licenses, certificates of
authority, orders and approvals of, and have made all filings applications
and registrations with Governmental Authorities necessary for the conduct
of their respective business operations as presently conducted
(collectively, the "Permits"), except for those Permits the absence of
which would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.10 Litigation.
Except as identified in Section 3.10 of the Seller Disclosure Letter,
there are no Actions before any Governmental Authority or arbitration panel
or tribunal pending or in progress or, to the Knowledge of Seller,
threatened, against Seller, the Entities, or any of their respective
Affiliates or any executive officer or director thereof relating to the
Equity Interests or Assumed Indebtedness or the respective assets or
businesses of the Entities, except as would not, individually or in the
aggregate, have a Material Adverse Effect. None of Seller, the Entities, or
any of their respective Affiliates are subject to any outstanding judgment,
order, writ, injunction, decree or award entered in an Action to which such
Person was a named party relating to the Equity Interests or Assumed
Indebtedness or the respective assets or businesses of such Persons, except
as would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.11 Employee Matters.
(a) Section 3.11(a) of the Seller Disclosure Letter lists all
material employee benefit and compensation plans and contracts and deferred
compensation, stock option, stock purchase, stock appreciation rights,
stock-based incentive bonus, severance, employment, change in control,
vacation or fringe benefit programs, policies, agreements, arrangements or
plans maintained by the Entities for the benefit of any of their current or
former Employees (collectively, the "Plans"). True and complete copies of
all material Plans, and all amendments thereto have been provided or made
available to Buyer or its representatives.
(b) To the Knowledge of Seller:
(i) each Plan is registered, funded, administered and invested,
as applicable, in substantial compliance with the current terms of such
Plan, and in accordance with Applicable Laws;
(ii) for any Plan where contributions are required to be made in
accordance with an actuarial valuation report, all minimum contributions
required to be made to such Plan have been made or will be timely made in
accordance with the actuarial report most recently filed with the
applicable Governmental Entity;
(iii) for any Plan where contributions are not required to be
made in accordance with an actuarial valuation report, all contributions
required to be made to such Plan have been made;
17
(iv) no event has occurred respecting any qualified Plan that
would result in the revocation of the registration of such Plan or could
otherwise reasonably be expected to adversely affect the tax status of any
such Plan; and
(v) each of the Entities have made all contributions to the
Pension Plans to which the Entities are required to make contributions.
(c) With respect to each Plan, (i) no material Action is pending
or, to the Knowledge of Seller, threatened and (ii) to the Knowledge of
Seller no facts or circumstances exist that would give rise to any material
Actions.
(d) Except as set forth in Section 3.11(d) of the Seller
Disclosure Letter, in the three (3) years prior to the date hereof there
have been no partial or full wind-ups declared in respect of any Pension
Plan.
(e) Except as set forth in Section 3.11(e) of the Seller
Disclosure Letter, none of Seller or the Entities has made any written
promise to create any Plan or to improve or change the benefits provided
under any Plan.
(f) Except as set forth in Section 3.11(f) of the Seller
Disclosure Letter, the consummation of the transactions contemplated hereby
will not (i) cause any of the Entities to be obliged to pay to any current
or former employee or officer of any of the Entities any termination pay,
severance pay, unemployment compensation or any other payment; or (ii)
accelerate the time of payment or vesting, or increase the amount of
compensation due to any such employee or officer.
Section 3.12 Labor Relations.
Except as set forth in Section 3.12 of the Seller Disclosure Letter,
(i) none of the Entities is a party to any labor or collective bargaining
agreements, and there are no labor or collective bargaining agreements
which pertain to any employees of the Entities, (ii) within the preceding
eighteen (18) months, there have been no representation or certification
proceedings, or petitions seeking a representation proceeding, pending or,
to the Knowledge of Seller, threatened in writing to be brought or filed
with any other labor relations tribunal or authority with respect to the
Entities and (iii) within the preceding twelve (12) months, to the
Knowledge of Seller, there have been no organizing activities involving the
Entities with respect to any group of their respective employees; (iv)
there are no pending or, to the Knowledge of Seller, threatened strikes,
work stoppages, slowdowns or lockouts against the Entities, or their
respective Employees or involving any of the Entities' facilities; and (v)
there are no pending unfair employment practice charges, grievances or
complaints filed or, to the Knowledge of Seller, threatened to be filed
with any Governmental Authority based on the employment or termination of
employment by the Entities of any employee.
Section 3.13 Intellectual Property.
(a) Subject to the provisions of Section 5.6 of this Agreement,
Section 3.13(a) of the Seller Disclosure Letter sets forth a list of all
material Argentine
18
and foreign: (i) patents and patent applications; (ii) trademark
registrations and applications; and (iii) copyright registrations and
applications, owned by the Entities. The foregoing schedules set forth at
Section 3.13(a) of the Seller Disclosure Letter are complete and accurate
in all material respects. To the Knowledge of Seller, the Entities have
taken all steps necessary to maintain these rights and have not taken any
action that would constitute abandonment thereof, including, but not
limited to, making any and all necessary filings with any governmental
authority, administrative office, or other entity, and paying any and all
necessary fees.
(b) Except as set forth on Section 3.13(b) of the Seller
Disclosure Letter or as would not have a Material Adverse Effect:
(i) the foregoing registrations are in effect and subsisting;
(ii) each of the Entities owns all of the rights and interests in
and has title to, or has validly licensed to it all of the Intellectual
Property used by such Person;
(iii) the Entities are the owners or authorized users of all the
Intellectual Property required to operate their respective businesses as
currently operated, free and clear of all Liens;
(iv) no Intellectual Property owned or used by the Entities is
subject to any outstanding judgment, injunction, order, decree or agreement
restricting the use, licensing or sublicensing thereof by any of such
Persons. There are no claims or actions pending or, to the Knowledge of
Seller, threatened against any of the Entities by any Person arising out of
or relating to any Intellectual Property owned or used by such Persons;
(v) the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not breach,
violate or conflict with any instrument or agreement governing any
Intellectual Property owned or used by the Entities, and will not cause the
forfeiture or termination or give rise to a right of forfeiture or
termination of any Intellectual Property owned or used by such Entities,
except for the forfeiture or termination of such Intellectual Property as
would not materially and adversely affect business, operations, financial
condition or assets of the Entities, taken as a whole; and
(vi) To the Knowledge of Seller, no third party is infringing
upon, misappropriating, or otherwise violating rights to the Intellectual
Property owned by the Entities.
Section 3.14 Representations with Respect to Environmental Matters.
To the Knowledge of Seller, and except as set forth in Section 3.14 of
the Seller Disclosure Letter or as would not, individually or in the
aggregate, have a Material Adverse Effect:
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(a) The Entities are in compliance with all applicable
Environmental Laws;
(b) The Entities have all of the Environmental Permits required
in order to conduct their operations in accordance with applicable laws or,
where such Environmental Permits have expired, have applied for a renewal
of such Environmental Permits in a timely fashion;
(c) The Entities are in compliance with the Environmental Permits
issued to them;
(d) There is no pending or threatened written Claim, lawsuit, or
administrative proceeding against the Entities under or pursuant to any
Environmental Law;
(e) None of the Entities is a party or subject to any
administrative or judicial order, decree or other agreement with a
Governmental Authority under or pursuant to any applicable Environmental
Law;
(f) None of the Entities has received written notice from any
third party, including any Governmental Authority, alleging that any of the
Entities has been or is in violation or potentially in violation of any
applicable Environmental Law or otherwise may be liable under any
applicable Environmental Law; and
(g) With respect to the real property that is currently owned or
leased by the Entities, there have been no spills or discharges of
Hazardous Substances on or underneath any such real property.
The representations and warranties set forth in this Section 3.14 are
Seller's sole and exclusive representations and warranties related to
environmental matters.
Section 3.15 Tax Matters.
Except for matters set forth on Section 3.15 of the Seller Disclosure
Letter, and limited to the Knowledge of Seller with respect to TGM:
(a) Each of the Entities and each consolidated, combined,
unitary, affiliated or aggregate group of which any of the Entities is or
was a member has timely filed all Tax Returns that it was required to file.
All such returns are correct and complete in all material respects. All
Taxes owed by any of the Entities have been paid, whether or not shown as
due on any such filed Tax Returns. None of the Entities currently is the
beneficiary of any extension of time within which to file any Tax Return.
No claim or assertion has ever been made by a taxing authority in a
jurisdiction where any of the Entities does not file Tax Returns that such
Entity is or may be subject to taxation by that jurisdiction. There are no
Tax liens on the assets of any of the Entities, other than Permitted Liens.
20
(b) The charges, accruals and reserves for Taxes reflected on the
December 31, 2006 Financial Statements are adequate to cover all
liabilities for Taxes of the Entities (except TGM), through the date of
such Financial Statements. The charges, accruals and reserves for Taxes for
TGM reflected on the December 31, 2005 Financial Statements are adequate to
cover all liabilities for Taxes of TGM through the date of such Financial
Statements. Since December 31, 2006, the Entities have not incurred any
liability for Taxes relating to transactions outside the ordinary course of
business or otherwise inconsistent with past custom and practice.
(c) Each of the Entities has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or
owing to any employee, former employee, independent contractor, creditor,
stockholder, affiliate, customer, supplier or other third party.
(d) There is no dispute or claim concerning any Tax liability of
an Entity either claimed or raised by any taxing authority in writing.
Section 3.15(d) of the Seller Disclosure Letter lists all United States
federal, state, local and non-United States Tax Returns with respect to
Taxes determined by reference to net income filed with respect to each
Entity for any taxable period ended on or after January 1, 2002, indicates
those Tax Returns that have been audited and indicates those Tax Returns
that currently are the subject of audit. No other Tax audits or other
administrative or judicial Tax proceedings with respect to Taxes of the
Entities are pending or are being conducted. No Entity has waived any
statute of limitations in respect of Taxes or agreed to any extension
thereof that is currently in effect.
(e) Section 3.15 of the Seller Disclosure Letter sets out the
classification for United States federal income tax purposes of each of the
Entities.
(f) Each of the Entities that is subject to VAT (or sales Tax) is
registered for VAT, is a taxable person and has complied in all material
respects with the requirements of the Laws relating to VAT. All VAT returns
and payments due in respect of the VAT group of which the Entities are
members have been made.
(g) To the Knowledge of Seller, all stamp, transfer and
registration Taxes have been paid in respect of documents in the
enforcement of which each of the Entities is interested.
(h) None of the Entities has any liability for the Taxes of any
person other than itself under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law), as a transferee
or successor, by contract or otherwise. No Entity has extended or waived
the application of any statute of limitations of any jurisdiction regarding
the assessment or collection of any Tax. None of the Entities is a party to
any Tax sharing or Tax indemnity agreements or similar arrangements
pursuant to which Buyer or its Affiliates would have any obligation to make
payments after the date hereof or surrender or share any Tax attributes or
benefits.
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(i) None of the Entities has made an election under Section
897(i) of the code to be treated as a United States corporation for
purposes of Section 897, 1445 and 6039C of the Code.
(j) None of the Entities (i) has an investment in U.S. property
within the meaning of Section 956 of the Code, (ii) is engaged in a United
States trade or business for U.S. federal income Tax purposes, or (iii) is
a passive foreign investment company within the meaning of the Code; and
(k) None of the Entities is a "surrogate foreign corporation"
within the meaning of Section 7874(a)(2)(B) of the Code or is treated as a
U.S. corporation under Section 7874(b) of the Code.
Section 3.16 Insurance.
(a) Section 3.16(a) of the Seller Disclosure Letter sets forth a
true and complete list of all current policies of all material property and
casualty insurance, insuring the properties, assets, employees and/or
operations of the Entities (collectively, the "Policies"). To the Knowledge
of Seller, all premiums payable under such Policies have been paid in a
timely manner and the Entities, as applicable, have complied in all
material respects with the terms and conditions of all such Policies.
(b) As of the date hereof, Seller has not received any written
notification of the failure of any of the Policies to be in full force and
effect. To the Knowledge of Seller, none of the Entities is in default
under any provision of the Policies, and except as set forth in Section
3.16(b) of the Seller Disclosure Letter, there is no claim by the Entities
or any other Person pending under any of the Policies as to which coverage
has been denied or disputed by the underwriters or issuers thereof.
Section 3.17 Regulatory Matters.
Seller is not a "public utility" as such term is defined in the FPA,
as amended, or the regulations of the FERC promulgated thereunder. No
Entity is a "public utility" as such term is defined in the FPA or the
regulations of the FERC promulgated thereunder. Each Entity that directly
owns or operates facilities used for the generation, transmission, or
distribution of electric energy for sale or the distribution at retail of
natural or manufactured gas for heat, light, or power is a FUCO, or, to the
extent that an Entity's activities are limited to the business of owning or
operating electric generating facilities and selling electricity at
wholesale such Entity is either an EWG or FUCO.
Section 3.18 Absence of Certain Changes or Events.
(a) Except as set forth in Section 3.18(a) of the Seller
Disclosure Letter, each Entity has conducted its respective businesses in
the ordinary course of business, consistent with past practice in all
material respects, since the date of the latest Financial Statements for
such Entity as described in Section 3.6.
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(b) Except as set forth in Section 3.18(b) of the Seller
Disclosure Letter, or in the Financial Statements, and the notes thereto,
there has not been with respect to each of the Entities any event or
development or change which has resulted or would reasonably be likely to
result in a Material Adverse Effect.
(c) Section 3.18(c) of the Seller Disclosure Letter sets forth a
true and complete list of the Distributions made by each Entity since the
date of the latest Financial Statements for such Entity as described in
Section 3.6.
(d) Except as set forth in Section 3.18(d) of the Seller
Disclosure Letter, since the date of the latest Financial Statements for
each Entity, such Entity has not:
(i) granted any severance or termination pay to, or entered
into, extended or amended any employment, consulting, severance or other
compensation agreement with, or otherwise increased the compensation or
benefits provided to any of its officers or other employees whose annual
salary base is in excess of $100,000;
(ii) sold, leased, licensed, mortgaged or otherwise disposed
of any properties or assets material to its business having a fair market
value in excess of $100,000 individually or $400,000 in the aggregate,
other than (A) sales made in the ordinary course of business, consistent
with past practice; or (B) sales of obsolete or other assets not presently
utilized in its business;
(iii) made any capital expenditure in excess of 10% of the
annual budgeted capital expenditures;
(iv) paid, repurchased, discharged or satisfied any of its
material Claims, Liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than in the ordinary course of
business, consistent with past practice;
(v) (A) incurred or assumed or guaranteed any long-term
debt, or except in the ordinary course of business consistent with past
practice, incurred or assumed or guaranteed short-term Indebtedness (other
than intercompany Indebtedness) exceeding $100,000 in the aggregate; (B)
modified the terms of any Indebtedness or other liability, other than
modifications of short-term debt in the ordinary course of business,
consistent with past practice; or (C) assumed, guaranteed, endorsed or
otherwise became liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other Person; or
(vi) authorized any of, or committed or agreed to take any
of, the actions referred to in the paragraphs (i) through (v) above.
(e) Except as set forth in Section 3.18(e) of the Seller
Disclosure Letter, since the date of the latest Financial Statements for
each Entity, such Entity has not incurred any material Tax liability
outside the ordinary course of
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business, made or changed any election for Tax purposes, changed any annual
accounting period for Taxes, filed any amended Tax Return, entered into any
closing agreement for Tax purposes, settled any Tax claim or assessment
relating to any Entity, surrendered any right to claim a refund of Taxes,
consented to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to any Entity, or taken any other
action relating to the filing of any Tax Return or the payment of any Tax,
if such election, adoption, change, amendment, agreement, settlement,
surrender, consent or other action would have the effect of increasing the
Tax liability of any Entity for any period ending after the Cut-off or
decreasing any Tax attribute of any Entity existing on the Cut-off.
Section 3.19 Absence of Undisclosed Liabilities.
None of the Entities has any Liabilities (whether absolute, accrued,
contingent or otherwise) except those Liabilities (a) disclosed and
reserved against in the Financial Statements (or notes thereto) as required
by GAAP, (b) set forth in Section 3.19 of the Seller Disclosure Letter, (c)
incurred in the ordinary course of business since the date of the latest
Financial Statements for such Entity as described in Section 3.6 or (d)
which would not result in a Material Adverse Effect.
Section 3.20 Property.
Except as set forth in Section 3.20 of the Seller Disclosure Letter,
each of the Entities has valid title to or leases, free and clear of any
Liens (other than Permitted Liens), all assets used or held for use by each
of the Entities, except for such assets the failure of which to so own or
lease would not, individually or in the aggregate, have a Material Adverse
Effect.
Section 3.21 Brokerage and Finders' Fees.
None of Seller, the Entities, or any of their Affiliates or their
respective stockholders, partners, directors, officers or employees, has
incurred, or will incur any brokerage, finders' or similar fee in
connection with the transactions contemplated by this Agreement.
Section 3.22 Corporate and Accounting Records.
The minute books of the Entities previously made available to Buyer
contain true, complete and accurate records of all meetings and accurately
reflect all other corporate action of their respective stockholders and
board of directors (including committees thereof). Each of the Entities
maintains adequate records which accurately and validly reflect
transactions conducted by such Entity in reasonable detail, and maintains
accounting controls, policies and procedures sufficient to ensure that such
transactions are (a) executed in accordance with its management's general
or specific authorization and (b) recorded in a manner which permits the
preparation of financial statements in accordance with Applicable Law and
applicable regulatory accounting requirements,
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Section 3.23 Affiliated Transactions.
Except as described in Section 3.23 of the Seller Disclosure Letter,
and except for trade payables and receivables arising in the ordinary
course of business consistent with past practices for purchases and sales
of goods or services consistent with past practice, none of the Entities
have been a party over the past twelve (12) months to any material
transaction or agreement with Seller or any Affiliate of Seller (other than
the Entities) and no director or officer of Seller or its Affiliates (other
than the Entities), has, directly or indirectly, any material interest in
any of the assets or properties of the Entities.
Section 3.24 Certain Practices.
None of the Entities or any of their respective Representatives has
corruptly (within the meaning of the US FCPA or any other similar
Applicable Law) or otherwise illegally offered or given, and, to the
Knowledge of Seller, no Person has corruptly (within the meaning of the US
FCPA or any other similar applicable Law) or otherwise illegally offered or
given on behalf of the Entities, anything of value to: (i) any official of
a Governmental Authority, any political party or official thereof, or any
candidate for political office; or (ii) any other Person, in any such case
while knowing, or having reason to know, that all or a portion of such
money or thing of value may be offered, given or promised, directly or
indirectly, to any official or employee of a Governmental Authority, any
political party or official thereof, or candidate for political office for
the purpose of the following: (x) influencing any action or decision of
such Person, in his or her official capacity, including a decision to fail
to perform his or her official function; (y) inducing such Person to use
his or her influence with any Governmental Authority to affect or influence
any act or decision of such Governmental Authority to assist any of the
Entities in obtaining or retaining business for, or with, any Governmental
Authority or to secure an improper advantage; or (z) where such payment
would constitute a bribe, kickback or illegal or improper payment to assist
any of the Entities in obtaining or retaining business for, or with, or
directing business to, any Person or in securing any improper advantage.
There have been no false or fictitious entries made in the books or records
of any of the Entities relating to any illegal payment or secret or
unrecorded fund and none of the Entities has established or maintained a
secret or unrecorded fund. Each Entity keeps books, records and accounts
which in reasonable detail which accurately and fairly reflect the
transactions and dispositions of its assets. Each of the Entities has
devised and maintained a system of internal accounting controls sufficient
to provide reasonable assurances that: (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary (x) to permit preparation of
financial statements in conformity with GAAP or any other criteria
applicable to such statements; and (y) to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences
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Section 3.25 No Other Representations or Warranties.
Except for the representations and warranties contained in this
Article III, none of Seller, the Entities, or any other Person makes any
other express or implied representation or warranty on behalf of Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Each Buyer hereby represents and warrants to Seller as follows:
Section 4.1 Corporate Organization; Qualification.
Such Person (a) is a limited liability company duly organized and
validly existing under the Laws of its jurisdiction of formation, (b) has
the requisite power to carry on its businesses as currently conducted and
(c) is duly qualified to do business in each of the jurisdictions in which
the ownership, operation or leasing of its properties or assets or the
conduct of its business requires it to be so qualified, except where the
failure to be so qualified would not materially and adversely affect the
ability of, or timing for, Buyer to consummate the transactions
contemplated by this Agreement.
Section 4.2 Authority Relative to this Agreement.
Such Person has full corporate or similar power and authority to
execute and deliver this Agreement and the other agreements, documents and
instruments to be executed and delivered by it in connection with this
Agreement and to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the
other agreements, documents and instruments to be executed and delivered in
connection with this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all the necessary action on the part of such Person and no other
organization or similar proceedings on the part of such Person are
necessary to authorize this Agreement and the other agreements, documents
and instruments to be executed and delivered in connection with this
Agreement or to consummate the transactions contemplated hereby and
thereby. This Agreement and the other agreements, documents and instruments
to be executed and delivered in connection with this Agreement have been
duly and validly executed and delivered by such Person and assuming that
this Agreement and the other agreements, documents and instruments to be
executed and delivered in connection with this Agreement constitute legal,
valid and binding agreements of the Seller are enforceable against such
Person in accordance with their respective terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally or general principles of equity.
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Section 4.3 Consents and Approvals.
Except as otherwise provided in Section 5.1(a) of this Agreement or
as set forth in Section 4.3 of the Buyer Disclosure Letter, such Person
requires no consent, approval or authorization of, or filing, registration
or qualification with, any Governmental Authority, or any other Person as a
condition to the execution and delivery of this Agreement or the
performance of the obligations hereunder, except where the failure to
obtain such consent, approval or authorization of, or filing of,
registration or qualification with, any Governmental Authority, or any
other Person would not materially and adversely affect the ability of, or
timing for, such Person to consummate the transactions contemplated by this
Agreement.
Section 4.4 No Conflict or Violation.
Except as set forth in Section 4.4 of the Buyer Disclosure Letter, the
execution, delivery and performance by such Person of this Agreement does
not:
(a) violate or conflict with any provision of the organizational
documents of such Person;
(b) violate any applicable provision of a law, statute, judgment,
order, writ, injunction, decree, award, rule or regulation of any
Governmental Authority, except where such violation would not materially
and adversely affect the ability of, or timing for, such Person to
consummate the transactions contemplated by this Agreement; or
(c) violate, result in a breach of, constitute (with due notice
or lapse of time or both) a default or cause any material obligation,
penalty or premium to arise or accrue under any material contract, lease,
loan, agreement, mortgage, security agreement, trust indenture or other
material agreement or instrument to which such Person is a party or by
which it is bound or to which any of its properties or assets is subject,
except as would not materially and adversely affect the ability of, or
timing for, such Person to consummate the transactions contemplated by this
Agreement.
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Section 4.5 Litigation.
Except as identified in Section 4.5 of the Buyer Disclosure Letter,
there are no Actions before any Governmental Authority or arbitration panel
or tribunal pending or in progress or, to Knowledge of such Person,
threatened, against such Person, or any of their respective Affiliates or
any executive officer or director thereof, except as would not materially
and adversely affect the ability of, or timing for, such Person to
consummate the transactions contemplated by this Agreement. Neither such
Person nor any of its Affiliates is subject to any outstanding judgment,
order, writ, injunction, decree or award entered in an Action to which such
Person was a named party, except as would not materially and adversely
affect the ability of, or timing for, such Person to consummate the
transactions contemplated by this Agreement.
Section 4.6 Brokerage and Finders' Fees.
Neither such Person nor any of its Affiliates, or their respective
members, stockholders, partners, directors, officers or employees, has
incurred, or will incur any brokerage, finders' or similar fee in
connection with the transactions contemplated by this Agreement.
Section 4.7 Investment Representations.
(a) Such Person is acquiring the Equity Interests to be acquired
by it hereunder for its own account, solely for the purpose of investment
and not with a view to, or for sale in connection with, any distribution
thereof in violation of the federal securities laws or any applicable
foreign or state securities law.
(b) Such Person understands that the acquisition of the Equity
Interests to be acquired by it pursuant to the terms of this Agreement
involves substantial risk. Such Person and its officers have experience as
an investor in securities and equity interests of companies such as the
ones being transferred pursuant to this Agreement and acknowledges that it
can bear the economic risk of its investment and has such knowledge and
experience in financial or business matters that such Person is capable of
evaluating the merits and risks of its investment in the Equity Interests
to be acquired by it pursuant to the transactions contemplated hereby.
(c) Such Person understands that the Equity Interests to be
acquired by it hereunder have not been registered under the Securities Act
on the basis that the sale provided for in this Agreement is exempt from
the registration provisions thereof. Such Person acknowledges that such
securities may not be transferred or sold except pursuant to the
registration and other provisions of applicable securities laws or pursuant
to an applicable exemption therefrom.
(d) Such Person acknowledges that the offer and sale of the
Equity Interests to be acquired by it in the transactions contemplated
hereby has not been accomplished by the publication of any advertisement.
Section 4.8 Regulation Matters.
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Such Person is not (a) "public utility," or a "holding company in a
holding company system that includes a transmitting utility or an electric
utility", as such terms are defined in the FPA or the regulations of the
FERC promulgated thereunder.
Section 4.9 No Other Representations or Warranties.
Except for the representations and warranties contained in this
Article IV, neither such Person nor any other Person makes any other
express or implied representation or warranty on behalf of such Person.
ARTICLE V
COVENANTS OF THE PARTIES.
Section 5.1 Notification to the CNDC; Negative Antitrust Decision;
Transfer of Equity Interests to a Third Purchaser.
(a) Notification of the Acquisition to the CNDC. Within seven (7)
days from the date hereof, and at any subsequent date that may be required
by instruction of the CNDC, Seller and Buyer shall cooperate with one
another and file all notifications, applications, registrations, filings,
declarations and reports required under the Antitrust Law relating to the
Acquisition, and use their reasonable efforts to take, or cause to be taken
all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable to obtain the Antitrust Approval.
(b) Negative Antitrust Decision.
(i) Buyer hereby expressly acknowledges and undertakes that the
entire risk as to a Negative Antitrust Decision and/or the issuance of any
resolution, decree, judgment, injunction or other order, whether temporary,
preliminary or permanent, oral or in writing, in each case pursuant to
Antitrust Law, that may prohibit, prevent or restrict the consummation of
the Acquisition rests exclusively with Buyer.
(ii) Buyer shall be the sole responsible party to perform any and
all actions required by the Negative Antitrust Decision including, but not
limited to, (i) a divesture of Buyer's or the Entities' businesses, product
lines or assets in favor of a third party, at its own risk, cost and
expense; and (ii) appointment of the management of the Entities following
directives by the CNDC or other antitrust authority. Notwithstanding
anything contained herein to the contrary, none of Seller or its Affiliates
shall be required to (i) divest any of its respective businesses, product
lines or assets that are not transferred to Buyer or (ii) take or agree to
take any other action or agree to any limitation that could reasonable be
expected to (a) result in a adverse effect on its business, assets,
condition (financial or otherwise) or (b) deprive any Seller of any benefit
of the Acquisition.
(iii) Each party shall promptly give to the other party notice of
all information in its possession regarding the Negative Antitrust Decision
or its
29
consequences and promptly transmit to the other party a copy of all
documents received or sent in that respect. Each party shall also promptly
respond to any reasonable request for information from the other party on
the Negative Antitrust Decision or its consequences.
(c) Transfer of Equity Interests to a Third Purchaser.
(i) Notwithstanding Section 5.1(f), upon issuance of a Negative
Antitrust Decision prohibiting the transfer of the Equity Interests to
Buyer, Buyer shall negotiate the sale and transfer of the Equity Interests
to a third party regarding whom the Antitrust Approval may be obtained (the
"Third Purchaser").
(ii) If legally required and for the exclusive purpose of
transferring the Equity Interests to the Third Purchaser, each Seller
hereby grants special irrevocable powers of attorney to Buyer and/or the
Persons whom Buyer may appoint to (i) take all reasonable actions to obtain
the relevant Antitrust Approval; (ii) notify the transfer of the Equity
Interests to the Ente Nacional Regulador de la Electricidad and to the
Republic of Argentina Secretariat of Energy; (iii) subscribe the relevant
documentation and make the relevant filings to record the transfer of the
Equity Interests on their respective official ownership records; and (iv)
collect from the Third Purchaser the purchase price of the Shares (it being
understood that if such purchase price were to exceed the Purchase Price,
then the excess shall be exclusively for Buyer's benefit). It is hereby
expressly agreed that the irrevocable powers of attorney provided for in
this Section 5.1(c) are granted for a period beginning on the date of
issuance of the Negative Antitrust Decision preventing the Acquisition and
ending on the date which is ten (10) years from the date hereof; it being
understood that the irrevocability of the special power of attorney granted
herein is based on both parties' interests.
(iii) Notwithstanding anything contained herein to the contrary,
from the transfer of the Equity Interests to Buyer pursuant to this
Agreement until the transfer of the Equity Interests to a Third Purchaser,
as the case may be, Buyer will have, to the fullest extent permitted by
law, complete control of the assets and businesses of the Entities. In
furtherance of the foregoing, Seller shall execute and deliver, or cause to
be executed and delivered, all such documents and instruments and shall
take, or cause to be taken, all such further or other actions, as Buyer may
reasonably deem necessary to permit Buyer to have complete control of the
Entities as from the date hereof.
(d) Waiver by Buyer. Seller will not be held liable for any loss
or damage arising out of any of the events provided for in Section 5.1(b)
hereof and/or the transfer of the Equity Interests to the Third Purchaser,
including, but not limited to, any difference between the Purchase Price
and the purchase price of the Equity Interests ultimately collected by
Buyer from the Third Purchaser. Buyer hereby irrevocably and
unconditionally waives to file any legal action and/or claim, judicial,
non-judicial or of any other nature, against any Seller or any other third
party directly or indirectly based on the fact that the Equity Interests
were sold at a price lower than the Purchase Price.
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(e) Waiver by Seller. Each Seller hereby irrevocably and
unconditionally waives any right it may have against Buyer based on the
fact that the Shares were sold to the Third Purchaser at a price higher
than the Purchase Price.
(f) Indemnification.
(i) Subject only to the terms and limitations set forth in this
Section 5.1 and not those set forth in Article VI, Buyer shall jointly and
severally indemnify, defend and hold harmless Seller Indemnified Parties
(whether or not also indemnified by any other Person under any other
document) from and against any penalties, fines, administrative sanctions,
costs and expenses (including reasonable attorneys' fees as provided in
(ii) below) which directly relate to, or arise out of, any of the events
provided for in Section 5.1(b), including fines, penalties and/or
administrative sanctions imposed, or handed down, by the CNDC, the
Secretariat of Internal Trade and/or any other agency, tribunal or court
because the Acquisition is ultimately deemed to breach the Antitrust Law
(an "Antitrust Claim").
(ii) Within five (5) days following the receipt by Seller of an
Antitrust Claim, Seller shall promptly give notice to each Buyer in
writing. Buyer shall assume and control the defense of an Antitrust Claim
with counsel of their own choice it being understood, however, that each
Seller may retain, at its own cost, separate co-counsel and participate
fully in the defense of the Antitrust Claim with full access to all
relevant information.
(iii) If an Antitrust Claim implies a fine, penalty and/or an
administrative sanction to any Seller, then at Seller's option Buyer shall
be jointly and severally liable to (i) pay the amount of the relevant fine,
penalty and/or an administrative sanction; or (ii) deposit in escrow at
Seller's satisfaction the amount of the relevant fine, penalty and/or an
administrative sanction. If Buyer fails to timely pay or deposit the
relevant amount of the fine, penalty and/or an administrative sanction, the
outstanding amount thereof shall bear default interest at a rate equal to
LIBOR plus two per cent (2%) per annum.
(iv) Notwithstanding Section 5.1(f)(iii), any and all expenses
and/or costs incurred by any Seller pursuant to Section 5.1(b), Section
5.1(c) and Section 5.1(f) (including, but not limited to, fines, penalties
and/or an administrative sanctions) shall be reimbursed by Buyer upon
request by Seller within five (5) Business Days from the date of the
request. If Buyer fails to timely reimburse the expenses and/or costs
incurred by any Seller, the outstanding amount thereof shall bear default
interest at a rate equal to LIBOR plus two per cent (2%) per annum.
(v) If Seller and Buyer are found jointly liable of any Antitrust
Claim, Buyer shall be the sole responsible for the settlement of said
Antitrust Claim and Buyer hereby waives any recoverability right it may
have against any Seller.
(vi) This Section 5.1 shall exclusively govern all Antitrust
Claims. For the avoidance of doubt, indemnity limitations contemplated in
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Section 6.2 hereof shall not apply to the indemnity undertakings assumed by
Buyer in this Section 5.1 regarding Antitrust Claims.
(g) Fees, Costs and Expenses. Except for Buyer's obligation to
pay all fees, costs and expenses (including, without limitation, reasonable
legal fees) incurred by the parties in connection with any Antitrust Claim,
each of the parties shall pay all fees, costs and expenses (including,
without limitation, reasonable legal fees) incurred by it in connection
with the filings made with the CNDC in order to obtain the Antitrust
Approval.
Section 5.2 Further Assurances.
On and after the date hereof, Seller and Buyer shall cooperate and use
their respective reasonable best efforts to take or cause to be taken all
appropriate actions and do, or cause to be done, all things necessary or
appropriate to consummate and make effective the transactions contemplated
hereby, including the execution of any additional documents or instruments
of any kind, the obtaining of consents which may be reasonably necessary or
appropriate to carry out any of the provisions hereof and the taking of all
such other actions as such party may reasonably be requested to take by the
other party hereto from time to time, consistent with the terms of this
Agreement, in order to effectuate the provisions and purposes of this
Agreement and the transactions contemplated hereby and thereby.
Section 5.3 Employee Matters.
(a) Subject to the following provisions, Buyer shall maintain the
employment of all Affected Employees following the date hereof for at least
a period of twelve (12) months as from the date hereof and subject to the
existence of proper grounds for Buyer for termination or restructuring
thereof.
(b) Subject to Section 5.3(c) and Section 5.3(d) below, on the
date hereof (unless previously done), Seller shall give notice to all
Affected Employees that the active participation of the Affected Employees
in those employee benefit plans, programs and arrangements that are not
sponsored by the Entities or that are not listed in Section 3.11(a) of the
Seller Disclosure Letter (such plans, programs and arrangements, the
"Seller Plans") shall terminate on the date hereof, and the Entities shall
terminate participation of Affected Employees in the Seller Plans as of the
date hereof. Each of the Entities shall be solely responsible for all
obligations and Liabilities under each employee benefit plan listed in
Section 3.11(a) of the Seller Disclosure Letter in existence as of the
date hereof, or that they establish, maintain or contribute to, on or after
the date hereof, and no such obligations or Liabilities shall be assumed or
retained by Seller or its Affiliates. In addition, Seller shall retain all
Liabilities and assets with respect to current and former employees of the
Entities under the Pension Plan for Employees of Consumers Energy and Other
CMS Energy Companies. Notwithstanding the foregoing, any Affected Employee
who is unable to report to work with Buyer as of the date hereof due to
disability (each, a "Disabled Employee"), shall continue to be eligible for
any applicable long-term disability and life insurance coverage pursuant to
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Seller's plans until such Disabled Employee returns to active employment
with Buyer or any of the Entities; provided, however, that in order to be
eligible for such benefits, each such Disabled Employee, pending approval
for long-term disability benefits or return to active employment, must
continue to pay all applicable long-term disability and life insurance
premiums due following the date hereof for such coverage pursuant to
Seller's long-term disability plan and life insurance plans. Buyer shall,
or shall cause the Entities to, (A) pay Disabled Employees who are on
short-term disability as of the date hereof the short-term disability
benefits, if any, that apply under the Buyer's plans, provided, however,
that such benefits need not be provided to the extent that they would
duplicate benefits paid under the Seller Plans, and (B) honor any
continuing pay or salary obligations and return to work obligations that
apply to any such Disabled Employees.
(c) Buyer and the Entities shall be responsible for all
Liabilities and obligations under the Worker Adjustment and Retraining
Notification Act and similar foreign, state and local rules, statutes and
ordinances resulting from the actions of Buyer and the Entities after the
date hereof. Buyer agrees to hold Seller harmless for any breach of such
responsibility and Buyer's indemnification of Seller in this regard
specifically includes any Claim by the Affected Employees for back pay,
front pay, benefits or compensatory or punitive damages, any Claim by any
Governmental Authority for penalties regarding any issue of prior
notification (or lack thereof) of any plant closing or mass layoff
occurring after the date hereof and Seller's costs, including reasonable
attorney's fees, in defending any such Claims.
(d) CMS Energy Corporation or its Affiliates shall retain all
assets that are accumulated through the date hereof under Financial
Accounting Standards Board Statement 106 (and deposited in various VEBA
accounts and 401(h) accounts of Seller or its Affiliates). Further, Seller
or its Affiliates shall retain the liability for PBOP for the benefit of
former employees of the Entities who are retirees of the Entities as of the
date hereof, and Affected Employees who are eligible to retire and
qualified for benefits under PBOP as of the date hereof, and Seller or its
Affiliates shall retain the responsibility for providing post-retirement
benefits (other than pension) to such employees pursuant to the eligibility
requirements of the Seller Plans.
(e) Nothing in this Section 5.3 shall (i) create any third party
beneficiary right in any current or former Employees, any beneficiary or
dependent thereof, or any collective bargaining or other labor
representation thereof, or (ii) constitute an amendment to any Plan.
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Section 5.4 Tax Covenants.
(a) Section 338(g) Elections. Except with the express written
consent of Seller, which can be withheld in Seller's sole and absolute
discretion, Buyer shall not make any election under Section 338(g) of the
Code (or any analogous provision of state, local, or foreign income tax
law) with respect to the deemed purchase of the assets of any of the
Entities.
(b) Tax Return Filings, Refunds, and Credits.
(i) Seller shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax
Returns with respect to the Entities which are Subsidiaries of the Seller
for Tax periods that end on or before the Cut-off or that otherwise are
required to be filed (taking into account any extensions) on or before the
date hereof (the "Seller Returns"), and will pay (or caused to be paid) by
such Entities all Taxes due with respect to the Seller Returns. The Seller
Returns shall be prepared in accordance with past practice, except as
required by applicable law. Seller shall make such income Tax Return
sufficiently in advance of the due date for filing any such income Tax
Returns to provide Buyer with a meaningful opportunity to review and
comment on such income Tax Returns before filing.
(ii) Buyer shall timely prepare and file (or cause such
preparation and filing) with the appropriate Tax authorities all Tax
Returns (the "Straddle Period Returns") with respect to the Entities which
are Subsidiaries of the Seller for all Tax periods ending after the Cut-off
that include the Cut-off (the "Straddle Period") except for Tax Returns
required to be filed (taking into account any extension) on or before the
date hereof. Except as otherwise required by applicable law, all Straddle
Period Returns shall be prepared in accordance with past practice. Buyer
shall provide Seller with copies of any Straddle Period Returns at least
forty-five (45) days prior to the due date thereof (giving effect to any
extensions thereto), accompanied by a statement (the "Straddle Statement")
setting forth and calculating in reasonable detail the Pre- Cutoff Taxes as
defined below. If Seller agrees with the Straddle Period Return and
Straddle Statement, Seller shall pay to Buyer (or Buyer shall pay to
Seller, if appropriate) an amount equal to the Ownership Percentage of Pre-
Cut-off Taxes as shown on the Straddle Statement not later than two (2)
Business Days before the due date (including any extensions thereof) for
payment of Taxes with respect to such Straddle Period Return. If, within
fifteen (15) days of the receipt of the Straddle Period Return and Straddle
Statement, Seller notifies Buyer that it disputes the manner of preparation
of the Straddle Period Return or the amount calculated in the Straddle
Statement, then Buyer and Seller shall attempt to resolve their
disagreement within the five (5) days following Seller's notification or
Buyer of such disagreement. If Buyer and Seller are unable to resolve their
disagreement, the dispute shall be submitted to a mutually agreed upon
nationally recognized independent accounting firm, whose expense shall be
borne equally by Buyer and Seller, for resolution, if possible, within
twenty (20) days of such submission. If the parties have not agreed on an
independent accounting firm within fifteen days following Seller's
notification of Buyer of such disagreement, on the request of any party
such independent accounting firm shall be appointed by the ICC Centre.
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Any independent accounting firm appointed by the ICC Centre shall be an
impartial and disinterested senior partner in an internationally recognized
accounting firm. The decision of such accounting firm with respect to such
dispute shall be binding upon Buyer and Seller, and Seller shall pay to
Buyer (or Buyer shall pay to Seller, if appropriate) an amount equal to the
Pre- Cut-off Taxes as decided by such accounting firm not later than two
(2) Business Days before the due date (including any extensions thereof)
for payment of Taxes with respect to such Straddle Period Return.
(iii) From and after the date hereof, Buyer and its Affiliates
(including the Entities) will not file any amended Tax Return, carryback
claim, or other adjustment request with respect to the Entities for any Tax
period that includes or ends on or before the Cut-off unless Seller
consents in writing; provided, however, that (i) such prohibition shall not
apply (A) to any amended Tax Return filed to address any Tax matter
excepted out of the Seller's tax representations and warranties in Section
3.15, or (B) to address any Tax matter for which, at the time of filing
such amended Tax Return, Seller's indemnification obligations under Section
6.2 hereof shall have expired, except, with respect to the foregoing
subparagraph (B) only, as would have, in Seller's reasonable opinion, an
adverse effect with regard to any Tax Returns filed by Seller and/or
Seller's Affiliates (not including the Entities) and (ii) with respect to
any Straddle Period Return, such consent shall not be unreasonably
withheld, or conditioned, provided Buyer has made arrangements to the
reasonable satisfaction of Seller to make Seller whole for any detriment or
cost incurred (or to be incurred) by Seller as a result of such amended
Straddle Period Return.
(iv) For purposes of this Agreement, in the case of any Taxes of
the Entities that are payable with respect to any Straddle Period, the
portion of any such Taxes that constitutes "Pre- Cut-off Taxes" shall be
the excess of (A) (i) in the case of Taxes that are either (x) based upon
or related to income or receipts or (y) imposed in connection with any
sale, transfer or assignment or any deemed sale, transfer or assignment of
property (real or personal, tangible or intangible) be deemed equal to the
amount that would be payable if the Tax period ended on the Cut-off and
(ii) in the case of Taxes (other than those described in clause (i))
imposed on a periodic basis with respect to the business, property, shares,
quota holdings or assets of the Entities, be deemed to be the amount of
such Taxes for the entire Straddle Period (or, in the case of such Taxes
determined on an arrears basis, the amount of such Taxes for the
immediately preceding Tax period) multiplied by a fraction the numerator of
which is the number of calendar days in the portion of the Straddle Period
ending on the Cut-off and the denominator of which is the number of
calendar days in the entire Straddle Period over (B) any prepayment or
advances of Taxes or any payments of estimated Taxes with respect to the
Straddle Period. For purposes of clause (i) of the preceding sentence, any
exemption, deduction, credit or other item that is calculated on an annual
basis shall be allocated to the portion of the Straddle Period ending on
the Cut-off on a pro rata basis determined by multiplying the total amount
of such item allocated to the Straddle Period by a fraction, the numerator
of which is the number of calendar days in the portion of the Straddle
Period ending on the Cut-off and the denominator of which is the number of
calendar days in the entire Straddle Period. Pre-Cut-off Taxes include any
Taxes attributable to a Person that is treated as a partnership for federal
income tax purposes as
35
if such Person allocated Tax items to its partners in a manner consistent
with this Section 5.4(b)(iv). In the case of any Tax based upon or measured
by capital (including net worth or long-term debt) or intangibles, any
amount thereof required to be allocated under this Section 5.4(b)(iv) shall
be computed by reference to the level of such items on the Cutoff. The
parties hereto will, to the extent permitted by Applicable Law, elect with
the relevant Tax authority to treat a portion of any Straddle Period as a
short taxable period ending as of the close of business on (i) the Cut-off
date or (ii) the date hereof, as applicable. For purposes of this
Agreement, "Post- Cut-off Taxes" shall include any Taxes of the Entities
that are payable with respect to a Straddle Period, except for the portion
of any such Taxes that constitutes Pre-Cut-off Taxes.
(v) Seller and Buyer shall reasonably cooperate in preparing and
filing all Tax Returns with respect to the Entities, including maintaining
and making available to each other all records reasonably necessary in
connection with Taxes of the Entities and in resolving all disputes and
audits with respect to all Tax periods relating to Taxes of the Entities.
(vi) For a period of seven (7) years after the date hereof, the
Seller and its representatives shall have reasonable access to the books
and records (including the right to make extracts thereof) of the Entities
to the extent that such books and records relate to Taxes and to the extent
that such access (i) is in the power of Buyer using reasonable best efforts
and (ii) may reasonably be required by Seller in connection with matters
relating to or affected by the operation of the Entities prior to the
Cut-off. Such access shall be afforded by Buyer upon receipt of reasonable
advance notice and during normal business hours. If Buyer shall desire to
dispose of any of such books and records prior to the expiration of such
seven-year period, Buyer shall, prior to such disposition, give Seller a
reasonable opportunity, at Seller's expense, to segregate and remove such
books and records as Seller may select.
(vii) For a period of seven (7) years after the date hereof,
Buyer and its representatives shall have reasonable access to the books and
records (including the right to make extracts thereof) of Seller to the
extent that such books and records relate to Taxes of an Entity or Taxes of
Seller and its Affiliates attributable to such Persons' investment in an
Entity that are reasonably necessary for Buyer and its members to compute
their Taxes (including, for the avoidance of doubt, such Person's share of
each Entity's previously taxed income, earnings and profits, and any deemed
dividend from such Person's sale of any Entity under Section 1248 of the
Code, and any information necessary to comply with Proposed Regulations
Section 1.959-1(d) and Proposed Regulations Section 1.959-3 or any
successor regulation and to the extent that such access (i) is within the
power of Seller using reasonable best efforts and (ii) may reasonably be
required by Buyer in connection with matters relating to or affected by the
operation of any Entity after the Cut-off. Such access shall be afforded by
Seller upon receipt of reasonable advance notice and during normal business
hours. If Seller shall desire to dispose of any such books and records
prior to the expiration of such seven year period, Seller shall, prior to
such disposition, give Buyer reasonable opportunity, at Buyer's expense, to
segregate and remove such books and records as Buyer may select.
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(viii) If an Indemnified Party actually receives a refund or
credit or other reimbursement with respect to Taxes for which it would be
indemnified under this Agreement, the Tax Indemnified Party shall pay over
such refund or credit or other reimbursement to the Tax Indemnifying Party.
(ix) Buyer shall not, and to the extent within the power of Buyer
using reasonable best efforts, cause any Entity to not, make, amend or
revoke any Tax election if such action would reasonably be expected to
adversely affect any of Seller or its Affiliates with respect to any Tax
period ending on or before the date hereof or for the portion of any
Straddle Period prior to the Cut-off or any Tax refund or credit with
respect thereto, except (A) to the extent such amendment or revocation
relates to any Tax matter excepted out of the Seller's tax representations
and warranties in Section 3.15 or as relates to (B) any Tax matter which,
at the time such election is made or revoked, Seller's indemnification
obligations under Section 6.2 hereof shall have expired, except, with
respect to the foregoing subparagraph (B) only, as would have, in Seller's
reasonable opinion, an adverse effect with regard to any tax returns filed
by Seller and/or Seller's Affiliate (not including the Entities). Seller
shall not, and shall cause any Entity to not, make, amend or revoke any Tax
election if such action would reasonably be expected to adversely affect
any of Buyer or its Affiliates with respect to any Tax period beginning
after the date hereof or for the portion of any Straddle Period after the
Cut-off or any Tax refund or credit with respect thereto.
(c) Certain Payments. Buyer and Seller agree to treat (and cause
their Affiliates to treat) any payment under this Section 5.4 as an
adjustment to the Purchase Price for all Tax purposes.
(d) Transfer and Similar Taxes. Notwithstanding any other
provisions of this Agreement to the contrary, all transfer, stamp,
registration and similar Taxes (collectively, "Transfer Taxes") incurred in
connection with the transactions contemplated by this Agreement shall be
borne 50% by Buyer and 50% by Seller and Buyer shall accurately file all
necessary Tax Returns and other documentation with respect to Transfer
Taxes and timely pay all such Transfer Taxes. If required by Applicable
Law, Seller will join in the execution of any such Return. Buyer shall
provide copies of any Tax Returns with respect to Transfer Taxes to Seller
no later than ten (10) days after the due dates of such Tax Returns. Seller
shall pay its portion of the Transfer Taxes to Buyer prior to the due date
of such Transfer Taxes.
(e) Termination of Tax Sharing Agreements. On the date hereof,
Seller shall cause all Tax sharing agreements between Seller or any of its
Affiliates (that is not one of the Entities) on the one hand, and any of
the Entities on the other hand, to be terminated, and all obligations
thereunder shall be settled, and no additional payments shall be made under
any provisions thereof after the date hereof.
(f) Actions Affecting Seller's Liability for Taxes. Except as
otherwise set forth in Section 5.4(f) of the Seller Disclosure Letter, on
or before December 31, 2007, Buyer (i) shall not sell, liquidate, merge or
otherwise dispose of any Entity, and (ii) shall cause each Entity which is
a Subsidiary of Buyer not to sell,
37
liquidate, merge or otherwise dispose of any other Entity or to dispose of
a significant portion of its assets outside of the ordinary course of
business, in each case, in a manner which by virtue of such transaction
being a taxable transaction of such Entity for U.S. tax purposes would
increase the U.S. Subpart F income of Seller or its Affiliates or the
deemed dividend recognized by Seller or its Affiliates under Section 1248
of the Code (such Subpart F income or deemed dividend hereinafter referred
to as the "Seller Tax Amount"), when netted or combined with any other
transaction involving an Entity which affects the Seller Tax Amount. For
the avoidance of doubt, this Section 5.4(f) shall not limit Buyer's rights
under Section 5.4(b) to address any Tax matter excepted out of the Seller's
Tax representations and warranties under Section 3.15.
Section 5.5 Intercompany Accounts.
Except with respect to the Assumed Indebtedness, all of which is
detailed in Section 5.5 of the Seller Disclosure Letter that will remain
outstanding as of the date hereof or be assumed by Buyer at the date
hereof, (i) Seller shall, and shall cause its Affiliates (other than the
Entities) to, pay in full all intercompany accounts payable to the
Entities; and (ii) Seller shall cause the Entities to pay in full all
intercompanies accounts payable to the Seller and its Affiliates (other
than the Entities), in each case before the date hereof, and in each case
in a manner that does not increase any Tax Liability or decrease any Tax
assets of any Entity.
Section 5.6 Surrender of Intellectual Property.
On the date hereof Seller shall cause each of Operating and CMS
Ensenada S.A., as the case may be, to surrender its right, title, and
interest in and to all trademarks, trademarks applications, domain names,
renewal applications, and Intellectual Property listed in Section 5.6 of
the Seller Disclosure Letter, as well its commercial name, trade name,
reputation and all its good will associated with its name, its trademarks
and its Intellectual Property. As from the date hereof, Buyer shall cause
each of Operating and CMS Ensenada S.A. to do their best efforts to obtain
the final surrender of such Intellectual Property.
Section 5.7 Maintenance of Insurance Policies.
(a) Seller and Buyer agree that Casualty Insurance Claims
relating to the businesses of the Entities (including reported claims and
including incurred but not reported claims) will remain with the Entities
immediately following the date hereof. For purposes hereof, "Casualty
Insurance Claims" shall mean workers' compensation, auto liability, general
liability and products liability claims and claims for damages caused to
the facilities of the Entities generally insured under all risk, real
property, boiler and mechanical breakdown insurance coverage. The Casualty
Insurance Claims are subject to the provisions of policies of insurance
with insurance carriers and contractual arrangements with insurance
adjusters maintained by Seller or its Affiliates prior to the date hereof
(collectively, the "Insurance Policies").
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(b) With respect to the Casualty Insurance Claims, the following
procedures shall apply: (i) Seller shall use reasonable best efforts to
make recovery under the relevant Insurance Policy and ensure that each of
its Affiliates shall take such steps as Buyer reasonably requires to make
and/or pursue any such claim (including giving notice of the claim to the
insurer at the request of Buyer) and to assist Buyer and the Entities in
making the claim; (ii) to the extent that recovery is made, Seller shall
ensure that any proceeds actually received by Seller or its Affiliates that
are not Entities are promptly paid to the applicable Entity which suffered
the insured event giving rise to the Casualty Insurance Claim (or to Buyer
on behalf of such Entity) and in any case within fifteen (15) Business Days
of the receipt of such proceeds; and (iii) Seller or its Affiliates shall
continue to administer, adjust, settle and pay, on behalf of the Entities,
all Casualty Insurance Claims with dates of occurrence prior to the date
hereof. Casualty Insurance Claims to be paid by Seller hereunder shall
include all costs necessary to settle claims including compensatory,
medical, legal and other allocated expenses.
(c) The parties acknowledge that the Insurance Policies may
provide coverage for workers' compensation, auto liability, general
liability and products liability claims and claims for damages not related
to the Entities ("Non-Entity Casualty Insurance Claims"). Seller agrees
that, when administering, settling and paying Casualty Insurance Claims, it
shall endeavor to provide that the economic benefits of the Insurance
Policies are shared equitably among the Casualty Insurance Claims and the
Non-Entity Casualty Insurance Claims (including, without limitation, by
ensuring that coverage limits are equitably allocated or reserved among
such claims or potential claims).
(d) Seller makes no representation or warranty with respect to
the applicability, validity or adequacy of any Insurance Policies, and
Seller shall not be responsible to Buyer or any of its Affiliates for the
failure of any insurer to pay under any such Insurance Policy.
(e) Nothing in this Agreement is intended to provide or shall be
construed as providing a benefit or release to any insurer or claims
service organization of any obligation under any Insurance Policies. Seller
and Buyer confirm that the sole intention of this Section 5.7 is to divide
and allocate the benefits and obligations under the Insurance Policies
between them as of the date hereof and not to effect, enhance or diminish
the rights and obligations of any insurer or claims service organization
thereunder. Nothing herein shall be construed as creating or permitting any
insurer or claims service organization the right of subrogation against
Seller or Buyer or any of their Affiliates in respect of payments made by
one to the other under any Insurance Policy.
(f) If Buyer requests a copy of an Insurance Policy relating to a
pending or threatened Casualty Insurance Claim, Seller shall provide a copy
of all relevant insurance policies which insure such Casualty Insurance
Claims within five (5) Business Days, provided, that if Seller cannot
provide such policy within five (5) days after exercising reasonable best
efforts to locate such policy, Seller shall continue to
39
exercise its reasonable best efforts to provide such policy to Buyer as
soon as possible thereafter.
Section 5.8 Preservation of Records. Buyer acknowledges and agrees
that Seller may, from time to time, in the normal course of investigating,
prosecuting and/or defending various ongoing matters which may relate to
the Entities or the businesses thereof, including its obligations pursuant
to Section 6.2 of the Agreement, have, and will continue to have, a need
(i) to refer to, and to use as evidence, certain books, records and other
data, including electronic data maintained in computer files, relating to
the Entities and /or their businesses and (ii) for the support and
cooperation of present or former employees of the Entities in the event
that such Persons' assistance or participation is needed to aid in the
defense or settlement of the such matters. Buyer agrees that it shall, at
its own expense, preserve and keep the records held by it relating to the
respective businesses of the Entities that could reasonably be required
after the consummation of the transaction contemplated in this Agreement by
Seller for a period of five (5) years; provided, however, that upon
expiration of such period, as applicable, Buyer shall give written notice
to Seller if it or the custodian of such books and records proposes to
destroy or dispose of the same. Seller shall have the opportunity for a
period of thirty (30) days after receiving such notice to elect to have
some or all of such books and records delivered, at Seller's expense and
risk, to a location chosen by Seller. In addition, Buyer shall make such
records available to Seller as may reasonably be required by Seller in
connection with, among other things, any insurance claim, legal proceeding
or governmental investigation relating to the respective businesses of
Seller and its Affiliates, including the Entities. Seller agrees to
maintain the confidentiality of all information provided by Buyer or the
Entities hereunder.
Section 5.9 Public Statements. No public or private release,
announcement or regulatory filing concerning the transaction contemplated
hereby shall be issued by any of the parties without the prior consent of
the other parties (which consent shall not unreasonably withheld), except
for such press release, announcement, or regulatory filing as is required
by law, court process or stock exchange rule to be made by the party
proposing to issue the same, in which case such party shall use its
reasonable best efforts to consult in good faith with the other party prior
to the issuance of any such press release, announcement or filing.
Section 5.10 Certain Transactions. Buyer shall not, and shall not
permit any of its Subsidiaries to, acquire or agree to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets
of or equity in, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise acquire or agree to acquire any assets if the
entering into of a definitive agreement relating to, or the consummation of
such acquisition, merger or consolidation would reasonably be expected to
(a) impose any material delay in the obtaining of, or significantly
increase the risk of not obtaining, any authorizations, consents, orders,
declarations or approvals of any Governmental Authority (other than any
authority competent under the Antitrust Law) necessary to consummate the
transactions contemplated by this Agreement or the expiration or
termination of any applicable waiting period, (b) significantly increase
the risk of any Governmental
40
Authority (other than any authority competent under the Antitrust Law)
entering an order prohibiting the consummation of the transactions
contemplated by this Agreement, (c) significantly increase the risk of not
being able to remove any such order on appeal or otherwise or (d)
materially delay or prevent the consummation of the transactions
contemplated by this Agreement.
Section 5.11 Use of Corporate Name; Transitional Use of Seller's Name.
As soon as reasonably practicable following the date hereof, but in no
event later than sixty (60) days following the date hereof, Buyer shall
cause each of the Entities to make any necessary legal filings with the
appropriate Governmental Authorities to register the change in their
corporate names. Buyer and its Affiliates shall hold harmless and indemnify
Seller and any of its Affiliates against all Damages resulting from or
arising in connection with the use by Buyer or any of its Affiliates of the
"CMS" name as provided in this Section 5.12.
Section 5.12 Use of Information Technology. Seller will ensure the
e-mail forwarding service from the Argentine Employees inboxes to the new
inboxes placed at the Buyer's servers for a period of three (3) months from
the date hereof. The following services will remain running for at least
one (1) month: (a) Internet access; (b) VPN access; (c) incoming and
outgoing e-mails to / from the Seller's current e-mail accounts; and (d)
blackberry access. Seller will also provide the users id's and passwords
for all the installed communication equipments, and upgrade the
administration levels of the Argentine servers to the maximum privileges.
Should Buyer request an extension for any time period provided herein, such
services shall be provided solely at Seller's discretion and at a
reasonable cost to be agreed upon by Buyer and Seller.
Section 5.13 Confidentiality. Buyer will hold, and will cause its
Representatives to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of Law, all
confidential documents and information concerning the Seller furnished to
Buyer in connection with the transactions contemplated by this Agreement,
except to the extent that such information can be shown to have been (i)
previously known on a non-confidential basis by Buyer, (ii) in the public
domain through no fault of Buyer or (iii) later lawfully acquired by Buyer
from sources other than the Seller; provided that Buyer may disclose such
information to its Representatives in connection with the transactions
contemplated by this Agreement so long as such Persons are informed by
Buyer of the confidential nature of such information and are directed by
Buyer to treat such information confidentially. The obligation of Buyer to
hold any such information in confidence shall be satisfied if it exercises
the same care with respect to such information as it would take to preserve
the confidentiality of their own similar information.
Section 5.14 Actions Relating to Entities.
Seller shall use its reasonable best efforts to cooperate with Buyer
after the date hereof, to:
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(a) comply with all Argentine foreign holding company regulations
in respect of Seller's holdings in each of the Entities (including, without
limitation, Art. 220 of Resolution 7/05 of the IGJ) and related laws and
regulations and provide evidence reasonably satisfactory of such
compliance;
(b) register all past capital increases and decreases of each the
Entities with the IGJ, to the extent such capital increases and decreases
have not been duly registered;
(c) fund all necessary reserve amounts (including reserve amounts
legally required to be funded) which have not been duly funded in
connection with dividends declared by each of the Entities;
(d) register with the Banco Central de la Republica Argentina,
and otherwise comply with all applicable Argentine foreign exchange
regulations (including, without limitation, Communication A3602, as
amended, of the Argentine Central Bank and Decree 616/05 and its
implementing regulations) relating to, the United States
Dollars-denominated indebtedness of each of the Entities set forth in
Section 3.7(b) of the Seller Disclosure Letter; and
(e) deliver to Buyer all the original counterparts of the United
States Dollars-denominated indebtedness of each of the Entities set forth
in Section 3.7(b) of the Seller Disclosure Letter.
ARTICLE VI
SURVIVAL; INDEMNIFICATION
Section 6.1 Survival.
(a) All representations and warranties contained herein shall
survive for a period of twelve (12) months following the date hereof except
for the representations and warranties of Seller set forth in Sections 3.1,
3.2 and 3.3, and of Buyer in Sections 4.1 and 4.2, which shall survive
indefinitely (such time periods set forth above are referred to herein as
the relevant "Indemnity Period"). The parties intend to shorten the statute
of limitations and agree that no claims or causes of action may be brought
against Seller, Buyer or any of their respective directors, officers,
employees, Affiliates, controlling persons, agents or representatives based
upon, directly or indirectly, any of the representations and warranties
contained in this Agreement after the Indemnity Period; provided that if a
written notice of claim for indemnification is made during the applicable
Indemnity Period in accordance with this Article VI, such claim shall
survive until its resolution.
(b) All covenants and agreements contained herein that by their
terms are to be performed in whole or in part, or which prohibit actions,
42
subsequent to the date hereof, shall survive the consummation of the
transaction contemplated hereby in accordance with their terms.
Section 6.2 Indemnification.
(a) Subject to the limitations set forth in this Article VI,
subsequent to the date hereof, Seller shall indemnify, defend, save and
hold harmless Buyer and its Affiliates, their respective successors and
permitted assigns, and their officers and directors (collectively, the
"Buyer Indemnified Parties"), from and against any and all Damages incurred
by a Buyer Indemnified Party arising out of, resulting from or incurred in
connection with:
(i) any breach or inaccuracy of any representation or warranty of
Seller contained in this Agreement, in each case, when made or deemed made;
(ii) any breach in any material respect by Seller of any covenant
or agreement contained in this Agreement; and
(iii) the matters set forth on Section 6.2(a)(iii) of the Seller
Disclosure Letter.
(b) Subject to the limitations set forth in this Article VI,
subsequent to the date hereof, each Buyer shall indemnify, defend, save and
hold harmless Seller and its Affiliates, their respective successors and
permitted assigns, and their officers and directors (collectively, the
"Seller Indemnified Parties") from and against any and all Damages to the
extent incurred by the Seller Indemnified Party arising out of, resulting
from or incurred in connection with:
(i) any breach or inaccuracy of any representation or warranty of
such Buyer contained in this Agreement, in each case, when made or deemed
made. For the avoidance of doubt, it is expressly understood that each of
Lucid and Newco shall be severally, and not jointly, liable for Damages
incurred by a Seller Indemnified Party as a result of a breach or
inaccuracy of any representation or warranty made by such Person or for the
breach of confidentiality obligations governed by Section 5.13 and, as a
result, a Seller Indemnified Party shall not be entitled to make a Claim,
seek contribution, assert joint and several liability or otherwise seek
indemnification against the other Buyer based on such breach or inaccuracy
or breach of confidentiality obligations; and
(ii) any breach in any material respect by Buyer of any covenant
or agreement contained in this Agreement.
(c) Any Person providing indemnification pursuant to the
provisions of this Section 6.2 is referred to herein as an "Indemnifying
Party," and any Person entitled to be indemnified pursuant to the
provisions of this Section 6.2 is referred to herein as an "Indemnified
Party."
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(d) Seller's indemnification obligations shall not apply to any
Claim for Damages unless and until the aggregate of all such Damages
exceeds one percent (1%) of the Purchase Price (the "Threshold Amount"), in
which event Seller's indemnity obligations shall apply to all Claims for
Damages in excess of the Threshold Amount, subject to a maximum liability
to Seller, in the aggregate, of $25,000,000 (the "Cap Amount"); provided,
however, that (i) any Claims for Damages for breach of the representations
and warranties set forth in Section 3.1, Section 3.2, and Section 3.3,
shall not be subject to the Threshold Amount, Cap Amount, or Minimum Claim
Amount (as defined below); and (ii) Seller's indemnification obligations
contained in Section 6.2(a)(iii) shall not be subject to the Threshold
Amount and the Minimum Claim Amount. Damages relating to any single breach
or series of related breaches of Seller's representations and warranties
shall not constitute Damages, and therefore shall not be applied towards
the Threshold Amount or be indemnifiable hereunder, unless such Damages
relating to any single breach or series of related breaches exceed $100,000
(the "Minimum Claim Amount").
(e) Buyer's indemnification obligations contained in Section
6.2(b)(i) shall not apply to any Claim for Damages unless and until the
aggregate of all such Damages equals the Threshold Amount, in which event
Buyer's indemnification obligation contained in Section 6.2(b)(i) shall
apply to all Claims for Damages in excess of the Threshold Amount, subject
to a maximum liability to the Buyer, in the aggregate, of the Cap Amount.
Damages relating to any single breach or series of related breaches of
Buyer's representations and warranties shall not constitute Damages, and
therefore shall not be applied towards the Threshold Amount or be
indemnifiable hereunder, unless such Damages relating to any single breach
or series of related breaches exceed the Minimum Claim Amount.
(f) The indemnification obligations of each party hereto under
this Section 6.2 shall inure to the benefit of the Buyer Indemnified
Parties and Seller Indemnified Parties, and such Buyer Indemnified Parties
and Seller Indemnified Parties shall be obligated to keep and perform the
obligations imposed on an Indemnified Party by this Section 6.2, on the
same terms as are applicable to such other party.
(g) In all cases in which a Person is entitled to be indemnified
in accordance with this Agreement, such Indemnified Party shall be under a
duty to take all commercially reasonable measures to mitigate all losses.
(h) All amounts paid by Seller or Buyer, as the case may be,
under this Article VI shall be treated as adjustments to the Purchase Price
for all Tax purposes.
(i) Notwithstanding any other provision of this Agreement, in no
event shall any Indemnified Party be entitled to indemnification pursuant
to this Article VI to the extent any Damages were attributable to such
Indemnified Party's own gross negligence or willful misconduct.
44
(j) The remedies provided in this Article VI shall be deemed the
sole and exclusive remedies of the parties, from and after the date hereof,
with respect to this Agreement and the transactions contemplated hereby.
Section 6.3 Calculation of Damages.
(a) The amount of any Damages suffered by any party hereto shall
be reduced by (i) any amount that is reserved for sums held in reserve in
respect of the indemnifiable event on the balance sheet of the Entities, as
applicable, as of December 31, 2006, to the extent such Damages are
suffered by a Buyer Indemnified Party, (ii) any amount that an Indemnified
Party is entitled to receive with respect thereto under any third party
insurance coverage or from any other party alleged to be responsible
therefore or (iii) any Tax Benefit realized by an Indemnified Party or its
Affiliates. For purposes of this Agreement, "Tax Benefit" shall mean the
Tax savings attributable to any deduction, expense, loss, credit or refund
to the indemnified party or its Affiliates, when incurred or received;
provided, however, that if such benefit is reasonably expected to arise or
be utilized after the year in which indemnification occurs pursuant to this
Agreement, then it means the present value of such Tax savings (calculated
using the one Prime Rate (as published in The Wall Street Journal on the
first Business Day of the taxable year in which the indemnification occurs)
and a Tax rate equal to the sum of the highest marginal Argentine corporate
income Tax rate or rates applicable to ordinary income or capital gain, as
the case may be, in effect for the taxable period in issue).
(b) If an Indemnified Party makes a claim for indemnification
under this Article VI, the Indemnified Party shall use its reasonable best
efforts to collect any amounts available under such insurance coverage and
from such other party alleged to have responsibility. If an Indemnified
Party receives an amount under insurance coverage or from such other party
with respect to Damages at any time subsequent to any indemnification
provided by Seller or Buyer, as the case may be, pursuant to this Article
VI, then such Indemnified Party shall promptly reimburse the Indemnifying
Party for any payment made or expense incurred by the Indemnifying Party in
connection with providing such indemnification up to such amount received
by the Indemnified Party, but net of any expenses incurred by the
Indemnified Party in collecting such amount. To the extent the Indemnifying
Party makes any indemnification payment pursuant to this Article VI in
respect of Damages for which an Indemnified Party has a right to recover
against a third party (including an insurance company), the Indemnifying
Party shall be subrogated to the right of the Indemnified Party to seek and
obtain recovery from such third party; provided, however, that if the
Indemnifying Party shall be prohibited from such subrogation, the
Indemnified Party shall seek recovery from such third party on the
Indemnifying Party's behalf and pay any such recovery to the Indemnifying
Party net of expenses.
Section 6.4 Procedures for Third-Party Claims. The obligations of any
Indemnifying Party to indemnify any Indemnified Party under this Article VI
with respect to Claim for Damages by third parties (including Governmental
Entities) (a "Third-Party Claim"), shall be subject to the following terms
and conditions:
45
(a) The Indemnified Party shall give the Indemnifying Party
written notice of any such Third-Party Claim reasonably promptly after
learning of such Third-Party Claim, and the Indemnifying Party may, at its
option, undertake the defense thereof by representatives of its own
choosing and reasonably acceptable to the Indemnified Party, and shall
provide written notice of any such undertaking to the Indemnified Party.
Failure to give prompt written notice of a Third-Party Claim hereunder
shall not affect the Indemnifying Party's obligations under this Article
VI, except to the extent that the Indemnifying Party is actually prejudiced
by such failure to give prompt written notice. The Indemnified Party shall,
and shall cause its employees and representatives to, cooperate reasonably
with the Indemnifying Party in connection with the settlement or defense of
such Third-Party Claim and shall provide the Indemnifying Party with all
available information and documents concerning such Third-Party Claim. The
Indemnifying Party shall provide the Indemnified Party with copies of all
non-privileged communications and other information in respect of the
Third-Party Claim and, with respect to any Third-Party Claim for Taxes,
shall allow Buyer to participate at its own expense in defense of the claim
under the reasonable control of the Indemnifying Party. If the Indemnifying
Party, within thirty (30) days after written notice of any such Third-Party
Claim, fails to assume the defense of such Third-Party Claim, or, after
assuming defense, negligently fails to defend and fails to call after
reasonable written notice of the same, the Indemnified Party against whom
such Third-Party Claim has been made shall (upon further written notice to
the Indemnifying Party) have the right to undertake the defense, compromise
or settlement of such Third-Party Claim on behalf of and for the account
and risk, and at the expense, of the Indemnifying Party, subject to the
right of the Indemnifying Party to assume the defense of such Third-Party
Claim at any time prior to settlement, compromise or final determination
thereof upon written notice to the Indemnified Party.
(b) Anything in this Section 6.4 to the contrary notwithstanding,
(i) the Indemnified Party shall not settle a Third-Party Claim for which it
is indemnified without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld, conditioned or delayed
and (ii) the Indemnifying Party shall not enter into any settlement or
compromise of any action, suit or proceeding, or consent to the entry of
any judgment for relief other than monetary damages to be borne by the
Indemnifying Party, without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld, conditioned or
delayed.
Section 6.5 Procedures for Inter-Party Claims.
In the event that an Indemnified Party determines that it has a Claim
for Damages against an Indemnifying Party hereunder (other than as a result
of a Third-Party Claim), the Indemnified Party shall give reasonably prompt
written notice thereof to the Indemnifying Party, specifying the amount of
such Claim and any relevant facts and circumstances relating thereto, and
such notice shall be promptly given even if the nature or extent of the
Damages is not then known. The notification shall be subsequently
supplemented within a reasonable time as additional information regarding
the Claim or the nature or extent of Damages resulting therefrom becomes
available to the Indemnified
46
Party. Any failure to give such reasonably prompt notice or supplement
thereto or to provide any such facts and circumstances will not waive any
rights of the Indemnified Party, except to the extent that the rights of
the Indemnifying Party are actually materially prejudiced thereby. The
Indemnified Party and the Indemnifying Party shall attempt to negotiate in
good faith for a thirty-day (30-day) period regarding the resolution of any
disputed Claims for Damages. If for any reason, such dispute cannot be
resolved by negotiation, on the request of any party it shall be resolved
by arbitration in accordance with Section 7.8 herein. Promptly following
the final determination of the amount of any Damages claimed by the
Indemnified Party, the Indemnifying Party, subject to the limitations of
the Minimum Claim Amount, Threshold Amount and the Cap Amount, shall pay
such Damages to the Indemnified Party by wire transfer of immediately
available funds.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Interpretation.
(a) Unless the context of this Agreement otherwise requires, (a)
words of any gender include the other gender; (b) words using the singular
or plural number also include the plural or singular number, respectively;
(c) the terms "hereof," "herein," "hereby" and derivative or similar words
refer to this entire Agreement; (d) the terms "Article," "Section" and
"Exhibit" refer to the specified Article, Section and Exhibit of this
Agreement, respectively; and (e) "including," shall mean "including, but
not limited to"; and (v) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties (whether real or personal).
Unless otherwise expressly provided, any agreement, instrument, law or
regulation defined or referred to herein means such agreement, instrument,
law or regulation as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent
and (in the case of a law or regulation) by succession of comparable
successor law and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
(b) For purposes of Article III and all covenants and obligations
of Seller hereunder including indemnification obligations of Article VI,
all representations, warranties, covenants and obligations made by Seller
shall be deemed to be jointly and severally made by each Seller entity.
(c) For purposes of Article V, in the event that Seller shall be
obligated to cause, or use its reasonable best efforts to cause, an
Affiliate over which it does not have voting control to act or not act,
directly or indirectly through the exercise of equity voting rights or
contractual and other rights, it shall be obligated to exercise all of its
contractual and other rights to cause such action or inaction by such
Affiliate.
47
Section 7.2 Disclosure Letters.
The Seller Disclosure Letter and the Buyer Disclosure Letter are
incorporated into this Agreement by reference and made a part hereof.
Section 7.3 Payments.
All payments set forth in this Agreement are in United States Dollars.
Such payments shall be made by wire transfer of immediately available funds
or by such other means as the parties to such payment shall designate.
Section 7.4 Expenses.
Except as expressly set forth herein, or as agreed upon in writing by
the parties, each party shall bear its own costs, fees and expenses,
including the expenses of its representatives, incurred by such party in
connection with this Agreement and the transaction contemplated hereby and
thereby.
Section 7.5 Choice of Law.
THIS AGREEMENT, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR
CHOICE OF LAWS OR ANY OTHER LAW THAT WOULD MAKE THE LAWS OF ANY OTHER
JURISDICTION OTHER THAN THE STATE OF NEW YORK APPLICABLE HERETO.
Section 7.6 Assignment.
This Agreement may not be assigned by either party without the prior
written consent of the other party; provided, however, that without the
prior written consent of the other party, each party shall have the right
to assign its rights and obligations under this Agreement to any third
party successor to all or substantially all of its entire business.
Section 7.7 Notices.
All demands, notices, consents, approvals, reports, requests and other
communications hereunder must be in writing, will be deemed to have been
duly given only if delivered personally or by facsimile transmission (with
confirmation of receipt) or by an internationally-recognized express
courier service to the parties at the following addresses or telephone or
facsimile numbers and will be deemed effective upon delivery; provided,
however, that any communication by facsimile shall be confirmed by an
internationally-recognized express courier service.
48
(i) If to the Seller:
CMS Enterprises Company
One Energy Plaza
Jackson, Michigan 49201
Attention: General Counsel
Telephone: (517) 788-0550
Facsimile: (517) 788-1671
With a required copy to:
Miller, Canfield, Paddock and Stone, PLC
101 North Main Street, 7th Floor
Ann Arbor, Michigan 48104
Attention: Michael D. VanHemert
Telephone: (734) 668-7117
Facsimile: (734) 747-7147
(ii) If to Buyer:
(a) Lucid Energy, LLC
30078 Schoenherr, Suite 150
Warren, Michigan
Attention: Rai Bhargava/Manouch Daneshvar
Telephone: (586) 445-2300
Facsimile: (586) 445-1782
With a required copy to:
Ufer & Spaniola, P.C.
5440 Corporate Drive, Suite 250
Troy, Michigan 48098-2648
Attention: Gerald Van Wyke, Esquire
Telephone: (248) 641-7000
Facsimile: (248) 641-5120)
(b) New Argentine Generation Company, L.L.C.
410 Park Avenue, Suite 510,
New York, NY 10022
Attention: Authorized Person
Telephone: (212) 751-9233
Facsimile: (212) 355-3594
49
With a required copy to:
Garrigues
410 Park Avenue, Suite 510,
New York, NY 10022
Attention: Xavier Ruiz
Telephone: (212) 751-9233
Facsimile: (212) 355-3594
Citigroup Financial Products Inc.
390 Greenwich Street
7th Floor
NY, NY 10013
Attention: Al Valma
Telephone: 212-657-8195
Facsimile: 212-657-9042
Attention: Michael Triolo
Telephone: 212-723-1305
Facsimile: 212-723-8036
or to such other address as the addressee shall have last furnished in
writing in accord with this provision to the addressor.
Section 7.8 Resolution of Disputes.
Except for the resolution of disputes that shall be resolved in
accordance with the procedures set forth in Sections 5.1 and 6.5 herein,
all disputes arising out of or relating to this Agreement or any Related
Agreement or the breach, termination or validity thereof or the parties'
performance hereunder or thereunder ("Dispute") shall be resolved as
provided by this Section 7.8.
(a) If the Dispute has not been resolved by executive officer
negotiation within thirty (30) days of the disputing party's notice
requesting negotiation, or if the parties fail to meet within twenty (20)
days from delivery of said notice, such Dispute shall be submitted to and
finally settled by arbitration in accordance with the Rules of Arbitration
of the International Chamber of Commerce in New York ("ICC") then in effect
(the "Rules"), except as modified herein.
(b) The arbitration shall be held, and the award shall be
rendered, in the English language. There shall be three arbitrators, one of
whom shall be nominated by each of Buyer and Seller in accordance with the
Rules. The two party appointed arbitrators shall have thirty (30) days from
the confirmation of the nomination
50
of the second arbitrator to agree on the nomination of a third arbitrator
who shall serve as chair of the arbitral tribunal. On the request of any
party, any arbitrator not timely appointed in accordance with this
Agreement or the Rules shall be appointed by the ICC.
(c) The award shall be final and binding upon the parties as from
the date rendered, and shall be the sole and exclusive remedy between the
parties regarding any claims, counterclaims, issues, or accounting
presented to the arbitral tribunal. Judgment upon any award may be entered
and enforced in any court having jurisdiction over a party or any of its
assets. For the purpose of the enforcement of an award, the parties
irrevocably and unconditionally submit to the jurisdiction of a competent
court in any jurisdiction in which a party may have assets and waive any
defenses to such enforcement based on lack of personal jurisdiction or
inconvenient forum. This Agreement and the rights and obligations of the
parties shall remain in full force and effect pending the award in any
arbitration proceeding hereunder.
(d) The Parties agree that any court action or proceeding to
compel or in support of arbitration or for provisional remedies in aid of
arbitration, including but not limited to any action to enforce the
provisions of this Section 7.8, for temporary injunctive relief to maintain
the status quo or prevent irreparable harm prior to the appointment of the
arbitral tribunal, shall be brought exclusively in the federal or state
courts located in New York, New York (the "New York Courts"). The Parties
hereby unconditionally and irrevocably submit to the exclusive jurisdiction
of the New York Courts for such purpose, and to the non-exclusive
jurisdiction of the New York Courts in any action to enforce any
arbitration award rendered hereunder, and waive any right to stay or
dismiss any such actions or proceedings brought before the New York Courts
on the basis of forum non conveniens or improper venue. Without prejudice
to such provisional remedies as may be available under the jurisdiction of
a national court, the arbitral tribunal shall have full authority to grant
provisional remedies and to direct the parties to request that any court
modify or vacate any temporary or preliminary relief issued by such court,
and to award damages for the failure of any party to respect the arbitral
tribunal's orders to that effect.
Section 7.9 Language.
The parties confirm that it is their wish that this Agreement and any
other documents related hereto or thereto, including notices, schedules and
authorizations, have been and shall be drawn up in the English language
only.
Section 7.10 No Right of Setoff.
Neither party hereto nor any Affiliate thereof may deduct from, set
off, holdback or otherwise reduce in any manner whatsoever any amount owed
to it hereunder or pursuant to any Related Agreement against any amounts
owed hereunder of pursuant to any Related Agreement by such Persons to the
other party hereto or any of such other party's Affiliates.
51
Section 7.11 Time is of the Essence.
Time is of the essence in the performance of the provisions of this
Agreement.
Section 7.12 Specific Performance.
Each party acknowledges and agrees that any breach of any provision of
this Agreement would cause irreparable harm to the other party. Each party,
without prejudice to any rights to judicial relief it may otherwise have,
shall be entitled to equitable relief, including injunction and specific
performance. Each party agrees that it will not oppose the granting of such
relief on the basis that the other party has not suffered irreparable harm
or that the other party has an adequate remedy at Law. Each party agrees
that it will not seek and agrees to waive any requirement for the securing
or posting of a bond in connection with the other party's seeking or
obtaining such relief.
Section 7.13 Currency Matters.
(a) Each Party's obligations hereunder to make payments in
Dollars shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any currency other
than Dollars.
(b) The obligation of any Party to pay in Dollars those amounts
specified to be due in Dollars under this Agreement shall not be deemed to
have been novated, discharged or satisfied by any tender of (or recovery
under judgment expressed in) any currency other than Dollars. Additionally,
all amounts due under this Agreement shall be payable and paid in the
United States.
Section 7.14 Entire Agreement.
This Agreement, together with the Seller Disclosure Letter, Buyer
Disclosure Letter, Annexes I, II and III, Exhibits hereto, the
Confidentiality Agreement, and the closing letter between Seller and Buyer
dated the date hereof constitute the entire agreement between the parties
hereto with respect to the subject matter herein and supersede all previous
agreements, whether written or oral, relating to the subject matter of this
Agreement and all prior drafts of this Agreement, all of which are merged
into this Agreement. No prior drafts of this Agreement and no words or
phrases from any such prior drafts shall be admissible into evidence in any
action or suit involving this Agreement. In the case of any material
conflict between any provision of this Agreement and any other Related
Agreement, this Agreement shall take precedence.
Section 7.15 Binding Nature; Third Party Beneficiaries.
This Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their respective successors (whether by operation
of law or otherwise) and permitted assigns. Except as expressly provided
herein, none of the provisions of this Agreement shall be for the benefit
of or enforceable by any third party, including any creditor of either
party or any of their Affiliates. Except as expressly provided herein, no
such third party shall obtain any right under any provision of this
Agreement or shall by
52
reasons of any such provision make any Claim in respect of any Liability
(or otherwise) against either party hereto.
Section 7.16 Counterparts.
This Agreement may be executed in two (2) or more counterparts, each
of which, when executed, shall be deemed to be an original and both of
which together shall constitute one and the same document. Any counterpart
or other signature to this Agreement that is delivered by facsimile or
electronic mail shall be deemed for all purposes as constituting good and
valid execution and delivery by such party of this Agreement.
Section 7.17 Severability.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any applicable present or future law, and if the rights
or obligations of either party under this Agreement will not be materially
and adversely affected thereby, (i) such provision shall be fully
severable, (ii) this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part
hereof, (iii) the remaining provisions of this Agreement shall remain in
full force and effect and shall not be affected by the illegal, invalid or
unenforceable provision or by its severance herefrom and (iv) in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as a part of this Agreement, a legal, valid and enforceable
provision as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
Section 7.18 Headings.
The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
Section 7.19 Waiver.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or
on behalf of the party or parties waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by law or otherwise afforded, will
be cumulative and not alternative.
Section 7.20 Amendment.
This Agreement may be altered, amended or changed only by a writing
making specific reference to this Agreement and signed by duly authorized
representatives of each party.
53
IN WITNESS WHEREOF, Seller and Buyer, by their duly authorized
officers, have executed this Agreement as of the date first written above.
CMS ENTERPRISES COMPANY
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President and Chief Operating
Officer
CMS GENERATION HOLDINGS COMPANY
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President and Chief Executive
Officer
CMS INTERNATIONAL VENTURES, L.L.C.
By: /s/ Thomas W. Elward
------------------------------------
Name: Thomas W. Elward
Title: President
(Collectively, the Seller)
LUCID ENERGY, LLC
By: /s/ Manouch Daneshvar
------------------------------------
Name: Manouch Daneshvar
Title: President, COO and Secretary
NEW ARGENTINE GENERATION COMPANY, LLC
By: /s/ Rai Bhargava
------------------------------------
Name: Rai Bhargava
Title: Chairman and Chief Executive
Officer
NEW ARGENTINE GENERATION COMPANY, LLC
By: /s/ Manouch Daneshvar
------------------------------------
Name: Manouch Daneshvar
Title: President, Chief Operating
Officer and Secretary
(Collectively, the Buyer)
54
ANNEX I
EQUITY INTEREST
DIRECT EQUITY INTEREST
(i) 312,234,100 quotas of CMS Operating S.R.L. owned by CMS
International Ventures, L.L.C.
(ii) 43,176,438 quotas of CMS Operating S.R.L. owned by CMS Generation
Holding Company (12,1483% of the capital)
(iii) 62,055,630 quotas of CMS Generation S.R.L. owned by CMS
International Ventures, L.L.C.
(iv) 6,895,070 quotas of CMS Generation S.R.L. owned by CMS Generation
Holdings Company
(v) 121,999 shares of CMS Comercializadora de Energia S.A. owned by
CMS Enterprises Company
(vi) 1 share of CMS Comercializadora de Energia S.A. owned by CMS
Generation Holdings Company
(vii) 22,500 shares of CMS Centrales Termicas S.A. owned by CMS
Enterprises Company
(viii) 2,500 shares of CMS Centrales Termicas S.A. owned by CMS
Generation Holdings Company
(ix) 80,060 shares of CMS Ensenada S.A. owned by CMS Generation
Holdings Company
INDIRECT EQUITY INTEREST
(i) 37,931,940 shares of CMS Ensenada S.A. owned by CMS Operating
S.R.L.
(ii) 272,890,208 shares of Cuyana S.A. de Inversiones owned by CMS
Operating S.R.L.
(iii) 8,440,145 shares of Cuyana S.A. de Inversiones owned by CMS
Centrales Termicas S.A.
(iv) 141,946,679 class A shares and 115,772,224 class B shares of
Centrales
55
Termicas Mendoza S.A. owned by Cuyana S.A. de Inversiones.
(v) 8,702,400 class C shares of Transportadora de Gas del Mercosur
S.A. owned by CMS Operating S.R.L.
56
ANNEX II
ASSUMED INDEBTEDNESS
(i) Promissory Notes from CMS Ensenada S.A. to CMS Enterprises
Company dated (a) January 15, 2004; (b) July 15, 2004; and (c)
July 7, 2005 in the amounts of US$825,421, US$2,003,898, and
US$577,042, respectively plus accrued interests.
(ii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
CMS international Ventures L.L.C. - current balance is US$
7,807,814.45 as of January 31, 2007.
(iii) Promissory Note from Transportadora de Gas del Mercosur S.A. to
CMS Operating SRL - current balance is US$ 277,011.51 as of
January 31, 2007.
(iv) Promissory Note from CMS Generation Investment Company VI to
Cuyana S.A. de Inversiones dated December 21, 2005 - current
balance is US$12,484,339 plus accrued interests.
(v) Intercompany Account Payable to CMS International Ventures,
L.L.C. from CMS Operating S.R.L. in the amount of US$ 4,543,034
as of February 28, 2007.
57
ANNEX III
COPY OF THE HIDROINVEST SPA
58